UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                         Washington, DC  20549

                           FORM 10-KSB

X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF
                                 1934

               For the fiscal year ended March 31, 2003


       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
  SECURITIES
       EXCHANGE ACT OF 1934

        For the transition period from ________ to _________.

                   Commission file number: 0-26680


                       NICHOLAS FINANCIAL, INC.
            (Name of Small Business Issuer in its Charter)

       British Columbia, Canada                   8736-3354
   (State or Other Jurisdiction of             (I.R.S. Employer
    Incorporation or Organization)           Identification No.)

                       Nicholas Financial, Inc.
                 2454 McMullen Booth Road, Building C
                      Clearwater, Florida  33759
        (Address of Principal Executive Offices)    (Zip Code)

           Issuer's Telephone Number, Including Area Code:
                            (727) 726-0763


 Securities registered under Section 12(b) of the Exchange Act:  None

    Securities registered under Section 12(g) of the Exchange Act:
                         Common Stock, $0.01 Par Value

Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes  X    No
Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-KSB or any amendment to this Form 10-KSB.  The
issuer's revenues for its most recent fiscal year ended March 31, 2003
were $22,376,875.As of May 30, 2003, 5,006,021 shares of the
Registrant's Common Stock, $0.01 par value, were outstanding, and the
aggregate market value of the shares held by non-affiliates was
approximately $16,635,000.

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the issuer's
definitive Proxy Statement for the Annual Meeting of Stockholders
currently scheduled to be held on August 6, 2003, expected to be filed
with the Commission pursuant to Regulation 14A on or about July 9,
2003, are incorporated by reference in Part III of this Annual Report
on Form 10-KSB.
Transitional Small Business Disclosure Format  (check one) :  Yes
No  X

<PAGE>





                 (This page intentionally left blank)


<PAGE>

                       NICHOLAS FINANCIAL, INC.

                       FORM 10-KSB ANNUAL REPORT

                           TABLE OF CONTENTS
PART I                                                   Page No.

     Item 1.      Description of Business.....................3
     Item 2.      Description of Properties..................13
     Item 3.      Legal Proceedings..........................13
     Item 4.      Submission of Matters to a Vote
                   of Security Holders.......................13

PART II

     Item 5.      Market for Common Equity and Related
                   Stockholder Matters.......................14
     Item 6.      Management's Discussion and Analysis
                   of Financial Condition and Results
                   of Operations.............................15
     Item 7.      Financial Statements.......................27
     Item 8.      Changes In and Disagreements With
                   ccountants on Accounting and
                   Financial Disclosure......................49

PART III

     Item 9.      Directors, Executive Officers,
                   Promoters and Control Persons;
                   Compliance with Section 16 (a)
                   of the Exchange Act.......................49
     Item 10.     Executive Compensation.....................49
     Item 11.     Security Ownership of Certain Beneficial
                   Owners, Management and Related Stockholder
                   Matters...................................50
     Item 12.     Certain Relationships and Related
                   Transactions..............................50
     Item 13.     Exhibits and Reports on Form 8-K...........51
     Item 14.     Controls and Procedures....................54
     Item 15.     Principal Accountant Fees and Services.....54

<PAGE> 2

Forward-Looking Information

      This  report  on  Form  10-KSB contains various  forward-looking
statements within the meaning of Section 27A of the Securities Act  of
1933  and  Section  21E of the Securities Exchange  Act  of  1934  and
information that is based on management's beliefs and assumptions,  as
well  as information currently available to management.  When used  in
this  document,  the  words  "anticipate," "estimate,"  "expect,"  and
similar   expressions   are   intended  to  identify   forward-looking
statements.    Although  Nicholas  Financial,  Inc.,   including   its
subsidiaries ("the Company"), believes that the expectations reflected
in  such  forward-looking statements are reasonable, it  can  give  no
assurance  that  such  expectations will prove  to  be  correct.  Such
statements   are   subject   to  certain  risks,   uncertainties   and
assumptions.   Should  one  or more of these  risks  or  uncertainties
materialize, or should underlying assumptions prove incorrect,  actual
results  may  vary  materially from those  anticipated,  estimated  or
expected.   Among  the key factors that may cause  actual  results  to
differ  materially from those projected in forward-looking  statements
include  fluctuations  in  the  economy,  the  degree  and  nature  of
competition,  fluctuations  in interest  rates,  demand  for  consumer
financing in the markets served by the Company, the Company's products
and  services,  increases in the default rates experienced  on  retail
installment  sales  Contracts, regulatory  changes  in  the  Company's
existing  and future markets, and the Company's ability to expand  its
business,  including its ability to identify and complete acquisitions
and  integrate the operations of acquired businesses, to  recruit  and
retain qualified employees, to expand into new markets and to maintain
profit  margins  in  the  face of increased pricing  competition.  All
forward-looking  statements  included in  this  report  are  based  on
information  available  to the Company on the  date  hereof,  and  the
Company  assumes  no  obligation to update  any  such  forward-looking
statement. Prospective investors should also consult the risk  factors
described from time to time in the Company's reports on Forms  10-QSB,
8-K and 10-KSB and annual reports to shareholders.

<PAGE> 3

                               PART I
Item 1.     Description of Business

General

      Nicholas  Financial,  Inc. ("Nicholas  Financial-Canada")  is  a
Canadian  holding  company  incorporated under  the  laws  of  British
Columbia  in  1986.   The business activities of  Nicholas  Financial-
Canada  are conducted through its two wholly-owned subsidiaries formed
pursuant to the laws of the State of Florida, Nicholas Financial, Inc.
("Nicholas  Financial")  and Nicholas Data  Services,  Inc.,  ("NDS").
Nicholas  Financial is a specialized consumer finance company  engaged
primarily  in  acquiring  and  servicing installment  sales  Contracts
("Contracts")  for  purchases of new and used  automobiles  and  light
trucks.  To  a  lesser extent, Nicholas Financial  also  makes  direct
consumer loans and sells consumer-finance related products ("Insurance
Products").   NDS is engaged in designing, developing,  marketing  and
supporting industry specific computer application software  for  small
businesses located primarily in the Southeast United States.  Nicholas
Financial's financing activities accounted for approximately  99%  and
98%  of consolidated revenues for each of the fiscal years ended March
31, 2003 and 2002. NDS's activities accounted for approximately 1% and
2% of such revenues during the same periods.

       Nicholas  Financial-Canada,  Nicholas  Financial  and  NDS  are
hereafter collectively referred to as the "Company".  Unless otherwise
specified,  all financial information herein is designated  in  United
States currency.

      The  Company's principal executive offices are located  at  2454
McMullen  Booth  Road, Building C, Clearwater Florida 33759,  and  its
telephone number is (727) 726-0763.

Automobile Finance Business - Indirect Loans

      The  Company  is engaged in the business of providing  financing
programs, primarily on behalf of purchasers of new and used  cars  and
light  trucks who meet the Company's credit standards, but who do  not
meet  the  credit standards of traditional lenders, such as banks  and
credit unions, because of the age of the vehicle being financed and/or
the  customer's job instability or credit history. Unlike  traditional
lenders, which look primarily to the credit history of the borrower in
making  lending  decisions and typically finance new automobiles,  the
Company  is  willing  to  purchase  installment  sales  Contracts  for
purchases made by borrowers who do not have a good credit history  and
for  older  model  and high mileage automobiles. In  making  decisions
regarding the purchase of a particular installment sales Contract  the
Company considers the following factors related to the borrower: place
and  length  of  residence, current and prior job status,  history  in
making installment payments for automobiles, current income and credit
history.  In addition, the Company examines its prior experience  with
Contracts  purchased  from  the  dealer  from  which  the  Company  is
purchasing  the Contract, and the value of the automobile in  relation
to the purchase price and the term of the installment sales Contract.

     The Company's automobile finance programs are currently conducted
in Florida, Georgia, North Carolina, South Carolina, Ohio and Michigan
only  under  the  name Nicholas Financial, Inc. The Company  currently
operates  fifteen branch offices in Florida, three branch  offices  in
Georgia,  three branch offices in North Carolina, one branch in  South
Carolina, and five branches in Ohio.  As of March 31, 2003 the Company
had  non-exclusive agreements with approximately 750 dealers  for  the
purchase  of individual retail installment sales Contracts  that  meet
the  Company's financing criteria.  The dealer agreements require  the
dealer  to  originate  Contracts  in  accordance  with  the  Company's
guidelines. Once a Contract is purchased by the Company the dealer  is
no  longer  involved in the relationship between the Company  and  the
borrower,  other then through the existence of limited  representation
and warranties of the dealer.

<PAGE> 4

     The obligors under the Contracts typically make down payments, in
the form of cash or trade-in, ranging from 5% to 20% of the sale price
of  the  vehicle financed.  The balance of the purchase price  of  the
vehicle  plus  taxes,  title  fees and, if  applicable,  premiums  for
extended  service  Contracts,  accident and  health  insurance  and/or
credit life insurance, are generally financed over a period of  12  to
66 months. Accident and health insurance coverage enables the borrower
to make required payments under the Contract in the event the borrower
becomes unable to work because of illness or accident and credit  life
insurance pays the borrower's obligations under the Contract upon  his
or her death.

      The Company purchases Contracts from the automobile dealer at  a
negotiated price that is less than the original principal amount being
financed  (the  discount) by the purchaser  of  the  automobile.   The
amount of the discount depends upon factors such as the age and  value
of  the  automobile  and the creditworthiness  of  the  purchaser.  In
certain  markets, competition determines the discount that the Company
can  charge. Historically, the Contracts purchased by the Company have
been  purchased at discounts that range from 1% to 15% of the original
principal  amount of the Contract.  In addition to the  discount,  the
Company  charges  the  dealer a processing fee  of  $75  per  Contract
purchased. As of March 31, 2003, the Company's loan portfolio consists
exclusively  of  Contracts purchased without recourse to  the  dealer.
Although  all  the  Contracts  in the Company's  loan  portfolio  were
acquired  without recourse, the dealer remains liable to  the  Company
for  liabilities arising from certain representations  and  warranties
made  by the dealer with respect to compliance with applicable federal
and state laws and valid title to the vehicle.

      The  Company purchases a Contract only after the dealer and  the
Company  arrive at a negotiated price for the Contract and the  dealer
has provided the Company with the requisite proof that the vehicle  is
properly titled, that the Company has a perfected first priority  lien
on  the  financed vehicle, that the customer has obtained the required
collision  insurance naming the Company as loss  payee  and  that  the
installment sales Contract has been fully and accurately completed and
validly  executed.  Once  the Company has received  and  approved  all
required  documents, it pays the dealer for the Contract and commences
servicing the Contract.

      The  Company  requires the owner of the vehicle  to  obtain  and
maintain  collision insurance, naming the Company as the  loss  payee,
with  a  deductible of not more than $500. The Company does not  offer
collision insurance. Both the Company and the dealers offer purchasers
of  vehicles  certain  other  "add on products".  These  products  are
offered  by  the dealer on behalf of the Company or by the  automobile
dealer  on behalf of the dealership at the time of sale. They  consist
of  a  roadside  assistance  plan, extended warranty  protection,  gap
insurance, credit life insurance, credit accident and health insurance
and  credit property insurance. If the purchaser so desires, the  cost
of  these  products may be included in the amount financed  under  the
Contract.  As of March 31, 2003 and 2002, approximately 33%  and  19%,
respectively,  of the borrowers under Contracts in the Company's  loan
portfolio had elected to purchase such "add on products".

<PAGE> 5


      The  following table sets forth  certain information for each of
the fiscal years ended March 31, 2003 and  2002 respectively, relating
to the Company's automobile  finance business:

Contract Procurement

The  Company  purchases  Contracts   in   the   states  listed  below.
The amounts shown in the table below represent the total face value of
Contracts acquired.  The  Company  has  fifteen  branch  locations  in
Florida and  does  not have plans for significant additional expansion
in Florida. The Company has been expanding its Contract procurement in
North Carolina, South Carolina, Ohio and Michigan.  Please see "Future
Expansion."

The  Contracts  purchased  by   the Company are predominately for used
vehicles,less than 3% were new. The average model year collateralizing
the  portfolio  as  of  March 31, 2003 and 2002  was  a  1999and  1998
vehicle, respectively. Contracts purchased and originated are shown at
face value.

<TABLE>
<CAPTION>
         Maximum allowable           Fiscal years ended March 31,
 State   interest rate (1)            2003                2002
---------------------------------------------------------------------
<S>       <C>                    <C>                 <C>
FL         30%                    $37,230,822         $39,591,216
GA         29%                      7,880,717           7,088,402
NC         29%                      7,618,287           6,911,208
SC         29%                      2,788,167           1,213,691
OH         25%                      8,484,637           1,766,272
VA         29%                        134,636             365,079
MI         25%                       291, 994                   -
---------------------------------------------------------------------
Total                             $64,429,260         $56,935,868
=====================================================================


</TABLE>

      (1)The allowable maximum interest rates by State  i s subject to
         change and are governed by the  individual states the Company
         conducts business in.

<TABLE>
<CAPTION>

                                          Fiscal year ended
                                              March 31,
Contracts                              2003                2002
----------------------------------------------------------------
<S>                             <C>                  <C>
Purchases                        $64,429,260          $56,935,868
Weighted APR                          24.22%               24.57%
Average Discount                       8.91%                8.66%
Average Term (months)                     43                   41
Average Loan                          $8,102               $8,230
Number of Contracts                    7,952                6,918

</TABLE>

<PAGE> 6

Direct Loans

      The  Company is licensed to originate direct consumer  loans  in
Florida, Georgia and North Carolina. Direct loans are loans originated
directly  between  the  Company  and the  consumer.  These  loans  are
typically  for amounts ranging from $1,000 - $6,000 and are  generally
secured by a lien or by household goods. The majority of direct  loans
are  originated with current or former borrowers under  the  Company's
automobile   financing   program.  The   typical   direct   loan   has
significantly better credit risk due to the historical payment history
with  the  Company. The Company does not have a direct  consumer  loan
license  in  Ohio, South Carolina or Michigan. Typically, the  Company
allows  for  a  seasoning process to occur in a new  market  prior  to
determining whether to pursue a direct loan license there. The Company
expects to make a decision in the coming fiscal year on whether or not
to  pursue a direct loan license for Ohio. The Company does not expect
to  pursue a direct loan license in any other states during  the  next
fiscal  year. The size of the loan and maximum interest rate that  can
be  charged  varies  from  state to state in which  the  Company  does
possess  a direct loan license. The average loan made to date  by  the
Company had an initial principal balance of approximately $3,000.  The
Company   does   not  expect  the  average  loan  size   to   increase
significantly within the foreseeable future. The Company offers  loans
primarily to borrowers under the Contracts previously purchased by the
Company.   In  deciding whether or not to make  a  loan,  the  Company
considers  the individual's credit history, job stability, income  and
impressions  created during a personal interview with a  Company  loan
officer.   Additionally,  because  approximately  90%  of  the  direct
consumer loans made by the Company to date have been made to borrowers
under  Contracts  previously purchased by  the  Company,  the  payment
history of the borrower under the Contract is a significant factor  in
making  the  loan  decision.   The direct consumer  loan  program  was
implemented in April 1995 and currently accounts for less than  5%  of
total  annual  revenue for the Company.  As of March 31,  2003,  loans
made  by  the  Company  pursuant to its direct consumer  loan  program
constituted approximately 3% of the aggregate principal amount of  the
Company's loan portfolio.

      In connection with its direct consumer loan program, the Company
also  offers  health and accident insurance coverage and  credit  life
insurance  to borrowers. Borrowers in approximately 79% of  the  1,424
direct consumer loan transactions outstanding as of March 31, 2003 had
elected  to  purchase insurance coverage offered by the Company.   The
cost  of  this  insurance is included in the amount  financed  by  the
borrower.

      The  following table sets forth certain information for each  of
the  fiscal years ended March 31, 2003 and 2002 respectively, relating
to the Company's direct consumer loan business:


<TABLE>
<CAPTION>
                              Fiscal year ended
                                  March 31,
Direct loan originations      2003          2002
----------------------------------------------------
<S>                       <C>           <C>
 Originations              $3,647,074    $4,100,181
 Weighted APR                  26.29%        26.00%
 Average Term (months)             27            29
 Average Loan                  $2,965        $3,203
 Number of Contracts            1,230         1,280

</TABLE>

Financing Sources

      The  Company finances the acquisition of Contracts with retained
earnings,  cash flow from operations, loans from investors,  insiders,
and a revolving line of credit with Bank of America. In June 2002, the
Company extended the maturity date with Bank of America until November
30, 2004.

<PAGE> 7


      The  Bank of America line of credit is secured by all assets  of
the  Company. The interest rate payable by the Company on funds  drawn
under  the  line of credit is based on either the current  prime  rate
plus  25 basis points as published by Bank of America or several Libor
pricing  options.  In addition to interest, the Company  also  pays  a
monthly  fee to Bank of America equal to .25% of the amount  available
under the line of credit that has not been drawn upon. As of March 31,
2003,  the Company had drawn approximately $60 million under the  line
of credit.

Underwriting Guidelines

      The  Company's typical customer is 30 years old, has  a  monthly
gross  income of $1,700 and a credit history that fails  to  meet  the
lending  standards of most banks and credit unions.  Among the  credit
problems  experienced by the Company's customers that  resulted  in  a
poor  credit  history are: unpaid revolving credit  card  obligations;
unpaid  medical  bills;  unpaid student loans; prior  bankruptcy;  and
evictions  for  nonpayment  of rent.  The Company  believes  that  its
customer profile is similar to that of its direct competitors.

      Prior to its approval of the purchase of a Contract, the Company
is  provided with a standardized credit application completed  by  the
consumer   which  contains  information  relating  to  the  consumer's
background,  employment, and credit history. The Company also  obtains
credit  reports from Equifax, TRW or TransUnion which are  independent
reporting  services.  The Company verifies the  consumer's  employment
history,   income  and  residence.  In  most  cases,   consumers   are
interviewed by telephone by a Company application processor.

     The Company has established internal buying guidelines to be used
by its Branch Managers and underwriters when purchasing Contracts. Any
Contract that does not meet these guidelines must be approved  by  the
senior  management of the Company. The Company currently has  District
Managers  charged  with managing the specific branches  in  a  defined
geographic  area.  In addition to a variety of administrative  duties,
the  District  Managers are responsible for monitoring their  assigned
branch's compliance with the Company's underwriting standards.

      The  Company  continues to utilize its Loss Recovery  Department
("LRD")  to  perform on-site audits of branch compliance with  Company
buying  guidelines. LRD audits Company branches on a schedule that  is
variable depending on the size of the branch, length of time a  branch
has  been open, current tenure of the branch manager, previous  branch
audit  score  and  current  and historical branch  profitability.  LRD
reports  directly to the Accounting and Administrative  Management  of
the Company. The Company believes that an independent review and audit
of  its branches that is not tied to the sales function of the Company
is   imperative  in  order  to  assure  the  information  obtained  is
impartial.

      The  Company uses essentially the same criteria in  analyzing  a
direct  consumer  loan  as  it does in analyzing  the  purchase  of  a
Contract. Lending decisions regarding direct consumer loans  are  made
based  upon  a  review  of  the customer's  loan  application,  credit
history,  job stability, income, in-person interviews with  a  Company
loan  officer and the value of the collateral offered by the  borrower
to secure the loan.  To date, since approximately 90% of the Company's
direct loans have been made to individuals whose automobiles have been
financed  by  the  Company, the customer's payment history  under  the
automobile installment sale agreement is a significant factor  in  the
lending  decision.  The decision process with respect to the  purchase
of Contracts is similar, although the customer's prior payment history
with  automobile loans is weighted more heavily in the decision making
process  and the collateral value of the automobile being financed  is
considered.

      After reviewing the information included in the loan application
and  taking  the  other factors into account, Company  representatives
categorize   the   borrower   using   internally   developed    credit
classifications  of  "A", indicating higher creditworthiness,  through
"D",  indicating  lower  creditworthiness. In  the  absence  of  other
factors, such as a favorable payment history on a Contract held by the
Company,  the  Company generally makes direct consumer loans  only  to
individuals rated in categories "B" or higher.  Contracts are financed
for  individuals who fall within all four acceptable rating categories
utilized, "A" through "D".

<PAGE> 8


      Usually borrowers who fall within the two highest categories are
purchasing  a  two to four year old, low mileage used automobile  from
the  inventory of a new car or franchise dealer while borrowers in the
two lowest categories are purchasing an older, high mileage automobile
from an independent used automobile dealer.

      Upon  credit  approval of the customer and the  receipt  of  all
required  title  and  insurance documentation, the  Company  pays  the
dealer  for the Contract. The Company typically purchases the Contract
for  a  price that approximates the wholesale value of the  automobile
being financed.  The amount the Company is willing to pay a dealer for
a  particular Contract depends upon the credit rating of the customer.
The  Company  will pay more (e.g. purchase the Contract at  a  smaller
discount  from  the original principal amount) for  Contracts  as  the
credit  risk of the customer improves. The discounts from the  initial
principal amount of Contracts purchased by the Company range  from  1%
to  15%  and have averaged approximately 9% during the last two fiscal
years.

Servicing and Monitoring of Contracts

      The  Company  requires  all customers  to  obtain  and  maintain
collision  insurance  covering damage  to  the  vehicle.   Failure  to
maintain  insurance constitutes a default under the Contract  and  the
Company  may  at  its  discretion repossess  the  vehicle.  To  reduce
potential  loss due to insurance lapse, the Company has the legal  and
Contractual  right  to  force  place  its  own  collateral  protection
insurance policy which covers loss due to physical damage to  vehicles
not covered by collision insurance.

      The Company's Management Information Services personnel maintain
a  number  of  reports to monitor compliance by borrowers  with  their
obligations  under  Contracts and direct loans made  by  the  Company.
These  reports  may  be accessed on a real-time basis  throughout  the
Company by management personnel, including Branch Managers and  staff,
at  computer  terminals  located in the main office  and  each  branch
office.  The reports include: delinquency aging reports, insurance due
reports,  customer  promises  reports,  vehicle  information  reports,
purchase  reports, dealer analysis reports, static pool  reports,  and
repossession reports.

      A  delinquency  report is an aging report  that  provides  basic
information  regarding each account and indicates  accounts  that  are
past due.  The report includes information such as the account number,
address  of the borrower, home and work phone numbers of the borrower,
original   term  of  the  Contract,  number  of  remaining   payments,
outstanding balance, due dates, date of last payment, number  of  days
past due, scheduled payment amount, amount of last payment, total past
due, and special payment arrangements or agreements.

      Accounts that are less than 120 days matured are included on the
delinquency report on the first day that the Contract is contractually
past  due. After an account has matured more than 120 days, it is  not
included on the delinquency report until it is 11 days past due.  Once
an  account  becomes  30 days past due, repossession  proceedings  are
implemented  unless  the  borrower  provides  the  Company   with   an
acceptable explanation for the delinquency and displays a willingness,
an  ability to make the payment, and an agreed upon plan to return the
account  to current status. When an account is 60 days past  due,  the
Company  ceases recognition of income on the Contract and repossession
proceedings are initiated.  At 120 days delinquent, if the vehicle has
not  yet  been repossessed, the account is written off. Once a vehicle
has  been  repossessed, the related loan balance no longer appears  on
the   delinquency  report.  It  instead  appears  on   the   Company's
repossession report and is sold, either at auction or to an automobile
dealer.

      When  an  account  becomes delinquent, the  Company  immediately
contacts the borrower to determine the reason for the delinquency  and
to  determine if arrangements for payment can appropriately  be  made.
Once  payment arrangements acceptable to the Company have  been  made,
the  information is entered in its database and is used to generate  a
"Promises  Report",  which  is utilized by the  collection  staff  for
account follow up.


<PAGE> 9

      The  Company generates an insurance report to monitor compliance
with  the  insurance obligations imposed upon borrowers.  This  report
includes  the  account  number,  name and  address  of  the  borrower,
information regarding the insurance carrier, summarizes the  insurance
coverage,  identifies the expiration date of the policy, and  provides
basic  information  regarding  payment  dates  and  the  term  of  the
Contract.   This  report assists the Company in identifying  borrowers
whose  insurance  policy is up for renewal or  in  jeopardy  of  being
canceled.   The  Company sends written notices to,  and  makes  direct
contact with, borrowers whose insurance policies are about to lapse or
be  canceled.   If  the borrower fails to provide  proof  of  coverage
within  30  days of notice, the Company has the option  of  purchasing
insurance  and adding the cost and applicable finance charges  to  the
balance of the Contract.

       The  Company  prepares  a  repossession  report  that  provides
information  regarding repossessed vehicles and aids  the  Company  in
disposing   of  repossessed  vehicles.   In  addition  to  information
regarding the borrower, this report provides information regarding the
date of repossession, date the vehicle was sold, number of days it was
held  in  inventory  prior to sale, year and make  and  model  of  the
vehicle,  mileage,  payoff amount on the Contract,  NADA  book  value,
Black  Book  value,  suggested sale price, location  of  the  vehicle,
original  dealer, and notes other information that may be  helpful  to
the Company such as the condition of the vehicle.

      The Company also prepares a dealer analysis report that provides
information  regarding each dealer from which it purchases  Contracts.
This  report allows the Company to analyze the volume of business done
with  each  dealer and the terms on which it purchased Contracts  from
the dealer.

      The Company's policy is to aggressively pursue legal remedies to
collect  deficiencies from customers. Delinquency notices are sent  to
customers and verbal requests for payment are made beginning  when  an
account  becomes 11 days delinquent.  When an account becomes 30  days
delinquent   and  the  borrower  has  not  made  payment  arrangements
acceptable to the Company or has failed to respond to the requests for
payment,  a  repossession request form is prepared by the  responsible
branch  office  employee for approval by the branch  manager  for  the
vicinity  in  which the borrower lives. Once the repossession  request
has  been approved, first by the Branch Manager and secondly by  their
District Manager, it must then be approved by a corporate officer. The
repossessor delivers the vehicle to a secure location specified by the
Company  where  it  is held. The Company maintains relationships  with
several licensed repossession firms which repossess vehicles for  fees
that  range  from  $150  to  $350 for each  vehicle  repossessed.   As
required by Florida, Georgia, North Carolina, South Carolina and  Ohio
law, the customer is notified by certified letter the vehicle has been
repossessed  and  to  regain the vehicle they must  make  arrangements
satisfactory to the Company and pay the amount owed under the Contract
within ten days after delivery of the letter.  The minimum requirement
for return of the vehicle is payment of all past due amounts under the
Contract and all expenses associated with the repossession incurred by
the  Company.  If satisfactory arrangements for return of the  vehicle
are not made within the statutory period, the Company then sends title
to  the  vehicle  to the state title transfer department,  which  then
registers  the  vehicle in the name of the Company. The  Company  then
either  sells  the  vehicle to a dealer or has it  transported  to  an
automobile  auction for sale. On average, approximately 30 days  lapse
between  the  time the Company takes possession of a vehicle  and  the
time it is sold by a dealer or at auction. When the Company determines
that there is a reasonable likelihood of recovering part or all of any
deficiency  against the borrower under the Contract, it pursues  legal
remedies available to it including lawsuits, judgement liens and  wage
garnishments. Historically, the Company has recovered approximately 10-
15% of deficiencies from such borrowers. Proceeds from the disposition
of the vehicles are not included in the percentage range shown above.

<PAGE> 10

Marketing and Advertising

      The  Company's  Contract marketing efforts are  directed  toward
automobile  dealers. The Company attempts to meet  dealers'  needs  by
offering   highly-responsive,  cost-competitive  and  service-oriented
financing  programs.  The Company relies on its  District  and  Branch
Managers  to  solicit agreements for the purchase  of  Contracts  with
automobile  dealers  located within a 25-mile radius  of  each  branch
office. The Branch Manager provides dealers with information regarding
the Company and the general terms upon which the Company is willing to
purchase  Contracts.  The Company presently has no plans to  implement
any  other forms of advertising for the purchase of Contracts such  as
radio or newspaper advertisements.

      Currently,  the  primary  method  utilized  by  the  Company  in
soliciting borrowers under its direct consumer loan program is through
direct mailings followed by telephone calls to individuals who have  a
good  credit  history  with the Company in connection  with  Contracts
purchased by the Company. The Company to some extent uses direct  mail
marketing  to  those customers who meet the criteria  for  a  consumer
loan.


The  Industry

      The non-prime automobile finance market is highly fragmented and
historically  has  been serviced by a variety of  financial  entities,
including   captive   finance   subsidiaries   of   major   automobile
manufactures,  banks, independent finance companies,  and  small  loan
companies.  Many  of  these  financial entities  do  not  consistently
provide financing to this market. Although prime borrowers represent a
large  segment  of  the automobile financing market,  there  are  many
potential  purchasers  of  automobiles who do  not  qualify  as  prime
borrowers.  Purchasers  considered by  the  Company  to  be  non-prime
borrowers  are  generally  unable to obtain  credit  from  traditional
sources  of  automobile financing. The Company believes that,  because
these potential purchasers represent a substantial market, there is  a
demand  by  automobile dealers with respect to financing for non-prime
borrowers   that  has  not  been  effectively  served  by  traditional
automobile financing sources.


Computerized Information System

      The Company's utilizes integrated computer systems developed  by
NDS  to  enhance its ability to respond to customer inquiries  and  to
monitor the performance of its indirect and direct loan portfolio  and
the   performance  of  individual  borrowers  under  Contracts.    All
personnel   are   provided  with  instant,  simultaneous   access   to
information  from a single shared database.  The Company  has  created
specialized programs to automate the tracking of loans from inception.
The  capacity  of the networking system includes the Company's  branch
office   locations.   See  the  discussion  above  under  the  caption
"Servicing and Monitoring of Contracts" for a summary of the different
reports prepared by the Company.

<PAGE> 11

Strategy

      The  Company's  principal business strategy is to  continue  its
growth  and  to increase its profitability through greater penetration
in  its  current  markets, controlled geographic  expansion  into  new
markets  and selective portfolio acquisitions. As of the date of  this
report, the Company has no commitments or agreements in principle with
respect  to  any portfolio acquisitions. The Company also  intends  to
continue its expansion through the increased origination of additional
direct  consumer  loans.  The  Company  is  currently  expanding   its
automobile  financing  program in the States  of  Michigan  and  South
Carolina. The Company has targeted certain geographic locations within
these  states where it believes there is a sufficient market  for  its
automobile  financing  program. The Company  is  currently  purchasing
Contracts  utilizing  employees  who reside  in  these  states.  These
employees are developing their respective markets and the Company  has
created  a  Central  Buying  Office in its Corporate  Headquarters  to
purchase, process and service these Contracts. The Company's  strategy
is  to monitor these new markets and ultimately decide where and  when
to  open actual branch locations. No assurances can be given, however,
that  any  further  such expansion will occur.  The  Company  is  also
analyzing  other  markets  in states the Company  does  not  currently
operate  in,  however, no assurances can be given that  any  expansion
will occur in these new markets.

Competition

       The   consumer  finance  industry  is  fragmented  and   highly
competitive.   There  are  numerous financial service  companies  that
provide consumer credit in the markets served by the Company including
banks, other consumer finance companies, and captive finance companies
owned  by  automobile  manufacturers and  retailers.   Many  of  these
companies  have significantly greater resources than the Company.  The
Company  does not believe that increased competition for the  purchase
of  Contracts will cause a reduction in the interest rate  payable  by
the  purchaser of the automobile.  However, increased competition  for
the  purchase of Contracts will enable automobile dealers to shop  for
the best price, thereby giving rise to an erosion in the discount from
the initial principal amount at which the Company would be willing  to
purchase Contracts.

     The Company's target market consists of persons who are generally
unable  to  obtain  traditional used car financing  because  of  their
credit  history, the vehicle's mileage or age.  The Company  has  been
able to expand its automobile finance business in the non-prime credit
market by offering to purchase Contracts on terms that are competitive
with those of other companies which purchase automobile receivables in
that  market segment.  Because of the daily contact that many  of  its
employees  have with automobile dealers located throughout the  market
areas  served by it, the Company is generally aware of the terms  upon
which  its  competitors  are  offering  to  purchase  Contracts.   The
Company's  policy  is  to  modify its terms  if  necessary  to  remain
competitive.  The  Company  will  not sacrifice  credit  quality,  its
purchasing criteria or prudent business practices in order to meet the
competition  or  be  driven by unrealizable growth  expectations.  The
Company  expects to analyze new lending programs and marketing methods
which may be implemented with the objective of increasing profits  and
or its market share, including the possibility of offering to purchase
portfolios  of  seasoned Contracts from dealers in  bulk  transactions
from $100,000 to $10,000,000.

     The Company's ability to compete effectively with other companies
offering similar financing arrangements depends upon maintaining close
business  relationships with dealers of new  and  used  vehicles.   No
single  dealer out of the approximately 750 dealers that  the  Company
has  Contractual  relationships with accounted  for  over  3%  of  its
business volume for either of the fiscal years ended March 31, 2003 or
2002.

<PAGE> 12

Regulation

      The  Company's  financing operations are subject to  regulation,
supervision  and  licensing under various  federal,  state  and  local
statutes  and ordinances.  Additionally, the procedures that  must  be
followed  by  the  Company  in connection  with  the  repossession  of
vehicles  securing Contracts are regulated by each of  the  states  in
which  the  Company  does business. To date, the Company's  operations
have  been  conducted exclusively in the states of  Florida,  Georgia,
North  Carolina,  South Carolina, Ohio and Michigan. Accordingly,  the
laws  of  such states as well as applicable federal laws,  govern  the
Company's  operations.  Compliance with existing laws and  regulations
applicable to the Company has not had a material adverse effect on the
Company's  operations to date. Management believes that  it  maintains
all  requisite licenses and permits and is in material compliance with
all applicable local, state and federal regulations.

     The Company maintains a Retail Installment Seller's License and a
Sales  Finance Company License with the Florida Department of  Banking
and  Finance,  the  Georgia Secretary of State  (Business  Services  &
Regulation), the North Carolina Secretary of State, the South Carolina
Secretary  of  State,  the Ohio Secretary of State  and  the  Michigan
Department of Revenue. Pursuant to regulations of the State of Florida
governing  the Company's financing business activities, the Department
of  Banking  and  Finance conducts an on site audit  of  each  of  the
Company's Florida branches periodically to monitor compliance with the
applicable regulations.  The regulations govern, among other  matters,
licensure   requirements,  requirements  for  maintenance  of   proper
records,  payment of required fees to the States of Florida,  Georgia,
North  Carolina,  South Carolina, Ohio and Michigan, maximum  interest
rates that may be charged on loans to finance used vehicles and proper
disclosure to customers regarding financing terms.


Employees

      The Company's executive management and various support functions
are centralized at the Company's Corporate Headquarters in Clearwater,
Florida.  As  of March 31, 2003 the Company employed a  total  of  133
persons,  five of whom work for NDS and 128 of whom work for  Nicholas
Financial.  The Company provides paid holidays, vacation,  sick  time,
jury  time, health and life insurance, long-term disability insurance,
dental  insurance  and  a  retirement plan  that  includes  a  Company
matching formula on employee contributions as well as a Company profit
sharing  contribution for all qualified employees.  No  employees  are
covered  by a collective bargaining agreement and the Company believes
it has good relations with its employees.

<PAGE> 13


Item 2. Description of Properties

     The Company leases its Headquarters and branch office facilities.
Its  Headquarters, located at 2454 McMullen Booth Road, Building C  in
Clearwater, Florida, consist of approximately 9,959 square feet.   The
Company  occupies  the  space pursuant to a lease  that  commenced  on
January  1,  2000  and was amended on November 25, 2002.  The  amended
lease expires in January 2008.

      Each  of  the  Company's 27 branch offices located  in  Florida,
Georgia,   North  Carolina,  South  Carolina  and  Ohio  consists   of
approximately 1,200 square feet. These offices are located  in  office
parks,  shopping centers or strip malls and are occupied  pursuant  to
leases with an initial term of from two to five years at annual  rates
ranging  from  approximately  $8.00 to $16.00  per  square  foot.  The
Company  believes  that these facilities and additional  or  alternate
space  available  to  it  are  adequate to  meet  its  needs  for  the
foreseeable future.


Item 3. Legal Proceedings

     The Company is not a party to any pending legal proceedings other
than  ordinary routine litigation incidental to its business, none  of
which,  in  the  opinion of management, will have a  material  adverse
effect  on  the Company's business, financial position or  results  of
operations.


Item 4. Submission of Matters to a Vote of Security Holders

      No  matters were submitted to a vote of security holders  during
the quarter ended March 31, 2003.

<PAGE> 14
                               PART II


Item 5. Market for Common Equity and Related Stockholder Matters

     Since December 23, 1997, the Company's Common Stock has traded on
the  NASDAQ  SmallCap  System.  Effective May 5, 1999,  the  Company's
trading  symbol changed from "NICKF" to "NICK". Share information with
respect to the Common Stock is set forth in the table included below.

      As  of  March 31, 2003, there were approximately 500 holders  of
record  of  the  Company's Common Stock. Holders of Common  Stock  are
entitled  to  receive dividends if and when declared by the  Board  of
Directors  out of funds legally available therefore. To date,  it  has
been the Company's policy to retain earnings to finance the growth  of
its  business. Accordingly, the Company has not declared or  paid  any
cash  dividends since its inception and does not anticipate  declaring
or  paying any cash dividends in the foreseeable future. Any dividends
on  the  Common Stock will be at the sole discretion of the  Board  of
Directors  and  will depend upon the Company's profitability,  capital
requirements,   requirements  of  the  Company's  lenders,   statutory
restrictions and other factors deemed relevant by the Company's  Board
of  Directors. The Company's line of credit prohibits the  payment  of
dividends  without written approval from the Company's  consortium  of
lenders.

     The following table reflects the high and low sale prices for the
Company's  Common Stock for each of the periods indicated as  reported
by the NASDAQ Stock Market.
Price Range of Common Stock:

                                             High        Low
Fiscal Year ended March 31, 2003
     First Quarter ............             $6.09       $3.95
     Second Quarter.........                 5.34        4.01
     Third Quarter...........                4.34        3.85
     Fourth Quarter............              4.08        3.72

                                             High        Low
Fiscal Year ended March 31, 2002
     First Quarter ............             $3.75       $2.40
     Second Quarter.........                 5.50        3.15
     Third Quarter...........                4.75        3.54
     Fourth Quarter............              4.50        3.65


     The information set forth in the second paragraph (and
accompanying table) under the caption "Item 11. Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder
Matters" of this Annual Report on Form 10-KSB is incorporated herein
by reference.

<PAGE> 15


Critical Accounting Policy

     The Company's critical accounting policy relates to the allowance
for  losses on loans. It is based on management's opinion of an amount
that  is  adequate  to  absorb losses in the existing  portfolio.  The
allowance  for  credit  losses is established through  allocations  of
dealer discount and unearned income and a provision for loss based  on
management's  evaluation of the risk inherent in the  loan  portfolio,
the  composition of the portfolio, specific impaired loans and current
economic conditions. Such evaluation, which includes a review  of  all
loans  on  which  full  collectibility may not be reasonably  assured,
considers among other matters, the estimated net realizable  value  or
the  fair  value  of  the underlying collateral, economic  conditions,
historical  loan  loss experience, management's estimate  of  probable
credit  losses and other factors that warrant recognition in providing
for an adequate credit loss allowance.

Item  6.  Management's Discussion and Analysis of Financial  Condition
and Results of Operations

Overview

     Consolidated net income increased in the fiscal year ended  March
31,  2003 to $4,281,394 or $0.81 per diluted share from $3,932,139  or
$0.75  per  diluted  share in the fiscal year ended  March  31,  2002.
Earnings for the year were favorably impacted by significant growth in
the outstanding loan portfolio. The following table sets forth certain
financial data:


<TABLE>
<CAPTION>


                                             Year ended March 31
 Select Portfolio Information                2003            2002
--------------------------------------------------------------------
<S>                                     <C>               <C>
Average Net Finance Receivables(1)       $97,806,772       $84,388,641
Average Indebtedness(2)                   57,335,767        50,907,525
Total Finance Revenue(3)                  22,048,535        19,852,758
Interest Expense                           3,936,042         3,898,400
                                          ----------------------------
Net Finance Revenue                       18,112,493        15,954,358
Weighted average Contractual rate(5)          23.65%            23.93%
Gross Portfolio Yield(4)                      22.54%            23.53%
Average Cost of Borrowed Funds(2)              6.86%             7.66%
Provision for Credit Losses
 as a Percentage of Average Net
 Finance Receivables                           2.26%             2.27%
Net Portfolio Yield(4)                        16.26%            16.64%
Operating Expenses as a
 Percentage of Average Net
 FinanceReceivables (6)                        9.16%             9.09%
Pre-tax Yield as a Percentage of
 Average Net Finance Receivables(7)            7.10%             7.55%

Write-off to Liquidation(8)                    9.32%             8.62%
Net Charge-Off Percentage(9)                   8.13%             7.63%

</TABLE>

<PAGE> 16


(1) Average  net  finance receivables represents the  average  of  net
    finance   receivables  throughout  the  period.      Net   finance
    receivables   represents  gross  finance  receivables   less   any
    unearned finance charges related to those receivables.

(2) Average    indebtedness   represents   the   average   outstanding
    borrowings  under  the  Line of Credit and  notes  payable-related
    party.    Average  cost  of  borrowed  funds  represents  interest
    expense as a percentage of average indebtedness.

(3) Does  not  include  revenue generated by  the  Company's  software
    subsidiary  "NDS". See page 17 for detail on NDS revenue  for  the
    year ended March 31, 2003 and 2002, respectively.

(4) Gross  portfolio  yield  represents total finance  revenues  as  a
    percentage  of  average  net finance receivables.   Net  portfolio
    yield  represents net finance revenue income minus  the  provision
    for   credit  losses  as  a  percentage  of  average  net  finance
    receivables.

(5) Weighted average Contractual rate represents the weighted  average
    Annual  percentage rate (APR) of all Contracts  in  the  portfolio
    during the period.

(6) Does  not  include  operating expenses of  $426,349  and  $466,775
    associated  with the Company's software subsidiary  "NDS  for  the
    year ended March 31, 2003 and 2002, respectively

(7) Pre-tax  yield  represents  net portfolio  yield  minus  operating
    expenses as a percentage of interest earning      assets

(8)      Liquidation  is defined as beginning receivable balance  plus
    current  period  purchases  minus voids  and     refinances  minus
    ending receivable balance.

(9) Net  charge-off percentage represents net charge-offs  divided  by
    average net finance receivables outstanding during the period.


<PAGE> 17

Fiscal 2003 compared to Fiscal 2002

Interest Income and Loan Portfolio

     Interest  income  on  finance receivables, predominantly  finance
charge  income,  increased 11% to $22.0 million in  fiscal  2003  from
$19.9  million  in  fiscal  2002. The net finance  receivable  balance
totaled $86.2 million at March 31, 2003, an increase of 13% from $76.1
million  at  March  31,  2002.  The gross finance  receivable  balance
increased 13% to $136.7 million at March 31, 2003 from $120.5  million
at  March 31, 2002. The primary reason interest revenue increased  was
the increase in the outstanding loan portfolio. The primary reason net
finance  receivables  increased was the  opening  of  five  additional
offices  and the increased receivable base of several existing  branch
offices.

Computer Software Business

       In fiscal 2003, the revenues of NDS were $328,340 compared with
fiscal  2002  revenues of $365,367, a decrease of 10%. Operating  loss
for  fiscal  2003  was  $(8,009) compared with an  operating  loss  of
$(11,408) for fiscal 2002. The Company expects both operating revenues
and  income of NDS to remain relatively stable, although no assurances
can be given in this regard.

Operating Expenses

     Operating  expenses  excluding provision for  credit  losses  and
interest  expense increased to $9.4 million in fiscal 2003  from  $8.1
million   in   fiscal  2002.  This  increase  of  15%  was   primarily
attributable  to  the  opening  of five additional  branch  locations,
increasing  the  number  of  employees  in  several  existing   branch
locations  and also increasing the number of corporate personnel.  The
Company  increased its work force from 118 employees  at  the  end  of
fiscal 2002 to 133 employees at the end of fiscal 2003.

Interest Expense

     Interest  expense was $3.9 million in fiscal 2003 as compared  to
$3.9  million  in  fiscal 2002. The reason interest  expense  did  not
increase  even  though  there was an increase in  average  outstanding
borrowings  from $50.9 million to $57.3 million was due to a  decrease
in  the  average cost of borrowed funds. The average cost of  borrowed
funds decreased from 7.66% for fiscal 2002 to 6.86% for fiscal 2003.


<PAGE> 18

Analysis of Credit Losses

    Because of the nature of the borrowers under the Contracts and its
direct  consumer loan program, the Company considers the establishment
of  adequate reserves for credit losses to be imperative.  The Company
segregates  its  Contracts  into pools for  purposes  of  establishing
reserves  for losses.  Each such pool consists of the loans  purchased
by  a  Company branch office during a three month period. The  average
pool  consists  of  68 Contracts with an aggregate  initial  principal
amount  of  approximately $550,937. As of March 31, 2003, the  Company
had 429 active pools.

     The  Company pools Contracts according to branch location because
the  branches  purchase  Contracts in  different  markets  located  in
Florida,  Georgia, North Carolina, South Carolina, Ohio and  Michigan.
All Contracts purchased by a branch during a fiscal quarter comprise a
pool.  This method of pooling by branch and quarter allows the Company
to  evaluate  the  different markets where the branches  operate.  The
pools  also  allow  the Company to evaluate the  different  levels  of
customer  income, stability, credit history, and the types of vehicles
purchased in each market.

     Contracts are purchased from many different dealers and  are  all
purchased  on  an  individual Contract by Contract  basis.  Individual
Contract  pricing is determined by the automobile dealerships  and  is
generally  the lesser of State maximum interest rates or  the  maximum
interest  rate at which the customer will accept. In certain  markets,
competitive  forces will drive down Contract rates  from  the  maximum
rate  to a level where an individual competitor is willing to  buy  an
individual  Contract. The Company only buys Contracts on an individual
basis and never purchases Contracts in batches.

     Dealer discount represents the difference between the face  value
of  an  installment  Contract  and the amount  of  money  the  Company
actually pays the dealer for the Contract. The discount negotiated  by
the  Company  is a function of the credit quality of the customer  and
the  wholesale  value  of the vehicle. The automotive  dealer  accepts
these  terms  by  executing a dealer agreement with the  Company.  The
entire  amount of discount relates to credit quality, and is therefore
considered to be part of the credit loss reserve. The Company utilizes
a  static pool approach to track portfolio performance. A static  pool
retains  an  amount equal to 100% of the discount into a  reserve  for
credit  losses.  In  situations where, at the date  of  purchase,  the
discount  is  determined to be insufficient to  absorb  all  potential
losses  associated with the pool, a portion of future unearned  income
associated  with that specific pool will be added to the reserves  for
credit losses until total reserves have reached the appropriate level.
Subsequent  to  the  purchase, if the reserve  for  credit  losses  is
determined  to be inadequate for a pool which is not fully liquidated,
then  a  charge to income through the provision is used to reestablish
adequate reserves. If a pool is fully liquidated and has any remaining
reserves, the excess reserves are immediately recognized into  income.
For  pools  not fully liquidated, that are determined to  have  excess
reserves,  such  excess  amounts are accreted  into  income  over  the
remaining life of the pool. Reserves accreted into income for the year
ended  March 31, 2003 were $2,214,826 compared to $2,923,505  for  the
year  ended  March  31,  2002. The reason for  this  decrease  was  an
increase in the charge-off rate for the year ended March 31,  2003  to
9.32% from 8.62% for the year ended March 31, 2002.

     The Company has definitive underwriting guidelines it utilizes to
determine  which  Contracts  to purchase. These  guidelines  are  very
specific  and  result  in  all  loan  purchases  having  common   risk
characteristics.  The  Company  utilizes  its  District  Managers   to
evaluate  their  respective branch locations for  adherence  to  these
underwriting  guidelines. The Company also utilizes an internal  audit
department  to  assure adherence to its underwriting  guidelines.  The
Company utilizes the branch model which allows for Contract purchasing
to  be done on the branch level. Each Branch Manager may interpret the
guidelines differently and as a result the common risk characteristics
will  be  the  same on an individual branch level but not  necessarily
compared to another branch.

<PAGE> 19

     In  analyzing  a pool, the Company considers the  performance  of
prior  pools originated by the branch office, the performance of prior
Contracts  purchased from the dealers whose Contracts are included  in
the  current  pool,  the  credit rating of  the  borrowers  under  the
Contracts  in  the  pool, and current market and economic  conditions.
Each  pool  is analyzed monthly to determine if the loss reserves  are
adequate  and  adjustments  are made if  they  are  determined  to  be
necessary.

    The  Company  has experienced higher losses during the fiscal year
ended March 31, 2003,  although  not  to  the  extent  management  had
anticipated. This resulted in more mature static pools having reserves
in excess of estimates currently needed to liquidate these pools.  The
Company is in  the  process  of  accreting  these excess reserves from
these  more  mature pools over the remaining life of the pools. Static
pools originated during the fiscal year ended March 31, 2003 have seen
higher  losses  than  their  most  recent predecessors, however, these
specific  pools  still  have  adequate reserves even though the spread
between reserve percentage and write-off percentage has tightened. The
Company's  overall  reserve  percentage  has  increased from 12.92% of
gross receivables  as of March 31, 2002 to 13.17% of gross receivables
as of March 31, 2003.

<PAGE> 20

The following table sets forth a reconciliation of the changes in
dealer discount on Contracts.

<TABLE>
<CAPTION>
                                       Year ended March 31,
                                        2003         2002
                                  -----------------------------
<S>                               <C>             <C>
Balance at beginning of period     $11,259,898     $10,306,699
Discounts acquired on new volume    10,534,472       9,384,892
Losses absorbed                     (8,401,071)     (6,536,368)
Recoveries                           1,068,556         886,451
Reserves accreted                   (2,067,766)     (2,781,776)
                                   ----------------------------
Balance at end of period           $12,394,089     $11,259,898
                                   ============================
Dealer discount as a
 percent of gross
 Finance receivables                     9.37%           9.73%
                                   ============================

</TABLE>


The following table sets forth a reconciliation of the changes in
the allowance for credit losses on Contracts.

<TABLE>
<CAPTION>
                                      Year ended March 31,
                                       2003         2002
                                  --------------------------
<S>                                <C>          <C>
Balance  at  beginning of period    $4,105,174   $3,145,470
Current period provision             1,911,855    1,728,786
Losses absorbed                       (588,348)    (769,082)
                                    ------------------------
Balance at end of period            $5,428,681   $4,105,174
                                    ========================
Allowance as a percent of
 gross Finance receivables               4.10%        3.55%
                                    ========================

</TABLE>

The  following table sets forth a reconciliation of the changes in the
allowance for credit losses on Direct loans.

<TABLE>
<CAPTION>
                                 Year ended March 31,
                                   2003         2002
                                --------------------------
<S>                             <C>           <C>
Balance at beginning of period    $200,612     $319,545
Current period provision           302,004      184,132
Losses absorbed                   (208,802)    (177,012)
Recoveries                          29,372       15,676
Reserves accreted                 (147,060)    (141,729)
                                  ----------------------
Balance at end of period          $176,126     $200,612
                                  ======================
Reserves as a percent
of gross Finance receivables         4.04%        4.20%
                                  ======================

Total reserves at end of period  $17,998,896  $15,565,684
                                 ========================
Reserves as a percent of gross
  Finance receivables               13.17%       12.92%
                                 ========================

</TABLE>

<PAGE> 21


     The  average dealer discount associated with new volume  for  the
years   ended  March  31,  2003  and  2002  were  8.91%   and   8.66%,
respectively.  The  Company  does not consider  these  changes  to  be
material  and such changes are not the result of any change in  buying
philosophy or competition.

     The  provision  for credit losses increased for  the  year  ended
March 31, 2003 to $2,213,859 compared to $1,912,918 for the year ended
March  31, 2002. This increase is primarily attributed to an  increase
in  the Net Finance Receivable balance from $76.1 million at March 31,
2002  to  $86.2  million at March 31, 2003. To a  lesser  extent,  the
provision  for  credit losses increased as a result of certain  static
pools reaching reserve levels below Company estimates to absorb future
credit  losses.  In  these instances, the Company  increased  reserves
related  to  specific static pools through a direct charge  to  income
through the provision.

     The  Company's  losses  as a percentage of liquidation  increased
from  8.62% for the fiscal year ended March 31, 2002 to 9.32% for  the
fiscal  year  ended March 31, 2003. The Company anticipates  portfolio
performance will deteriorate in the near term but will stabilize  over
the   longer   term,  unless  the  overall  economic  conditions   and
unemployment  rate continues to deteriorate from current  levels.  The
Company  does not believe there have been any significant  changes  in
loan  concentrations, terms or quality of Contracts  purchased  during
the  current  fiscal year that would have contributed to the  rise  in
losses. The delinquency percentage for Contracts more than thirty days
past  due for the fiscal year ended March 31, 2003 decreased to  2.20%
from  2.32%  for the fiscal year ended March 31, 2002. The delinquency
percentage  for direct loans more than thirty days past  due  for  the
fiscal year ended March 31, 2003 increased to 2.22% from 0.86% for the
fiscal  year  ended  March  31,  2002.  The  Company  does  not   give
significant  consideration to short-term trends  in  delinquency  when
evaluating  reserve levels. Delinquency percentages tend  to  be  very
volatile and often are not necessarily an indication of future losses.
The  Company  utilizes a static pool approach to  analyzing  portfolio
performance  and looks at specific pool performance and recent  trends
as leading indicators to future performance of the portfolio.

     Recoveries as a percentage of current year losses were 11.9%  and
12.1%  for  the  years  ended March 31, 2003 and  2002,  respectively.
Recoveries  as  a  percent of losses have been declining  and  as  the
Company continues to expand, it has become more difficult to implement
the  loss  recovery model in geographic areas further  away  from  the
Company's corporate headquarters.

      Reserves accreted into income for the year ended March 31,  2003
and  2002 were $2,214,826 and $2,923,505, respectively. The amount and
timing  of  reserves accreted into income is a function of  individual
static  pool  performance. The Company has seen deterioration  in  the
performance  of  the portfolio, more specifically, static  pools  more
than  fifty  percent liquidated have seen an increase in  the  default
rate  when  compared to prior year pool performance during their  same
liquidation  cycle.  The Company attributes this increase  to  overall
general  economic  conditions and more specifically to  the  increased
unemployment rate in the markets in which the Company does business.

<PAGE> 22

      The  current unemployment rate compared to last year  has  risen
slightly.  The  Company  believes there is a correlation  between  the
unemployment  rate and future portfolio performance. The Company  does
not  anticipate  the unemployment level to rise significantly  in  the
future  nor  does it expect it to drop significantly  in  the  future,
therefore  the  Company  does  not plan on  increasing  or  decreasing
reserves  based  on  the  current unemployment  rate.  The  number  of
voluntary repossessions increased for the year ended March 31, 2003 as
compared  to  the  year  ended March 31,  2002,  however  the  Company
experienced stabilization in the number of voluntary repossessions  in
the fourth quarter ended March 31, 2003. As a result of this stability
the  Company believes the current reserve levels are adequate in  this
regard.  The  number of bankruptcy filings decreased slightly  in  the
first  six months of the fiscal year ended March 31, 2003 as  compared
to  the  first  six months of the fiscal year ended  March  31,  2002,
however  the last six months of the fiscal year ended March  31,  2003
saw  a  slight  increase  in the percentage of bankruptcy  filings  as
compared  to  the last six months of the fiscal year ended  March  31,
2002. The Company believes the percentage of bankruptcy filings  as  a
percentage  of active receivables will stabilize in the coming  fiscal
year,  as a result management believes current reserve levels  reflect
these assumptions.

      The  amount of future unearned income represents the  amount  of
finance charges the Company expects to fully earn over the life of the
current  portfolio,  and is computed as the product  of  the  Contract
rate,  the  Contract  term,  and  the  Contract  amount.  The  Company
aggregates the Contracts purchased during a three-month period for all
of   its  branch  locations,  after  the  analysis  of  purchase  date
accounting   is   complete,  any  uncollectable   amounts   would   be
contemplated in the allowance for credit losses.

<PAGE> 23

      The  following tables present certain information regarding  the
delinquency rates experienced by the Company with respect to Contracts
and under its direct consumer loan program:

<TABLE>
<CAPTION>

                                   Year Ended           Year Ended
                                  March 31, 2003       March 31, 2002
                                ---------------------------------------
<S>                           <C>   <C>  <C>       <C>    <C>   <C>
Contracts
Gross Balance Outstanding            $132,316,816          $115,683,683


                            Dollar                   Dollar
Delinquencies               Amount      Percent      Amount     Percent
-------------             ----------------------------------------------
30 to 59 days               $2,166,719   1.64%     $2,004,990    1.73%
60 to 89 days                  551,838   0.42%        400,486    0.35%
90 + days                      180,499   0.14%        276,096    0.24%
                           -----------   -----     ----------   ------
Total Delinquencies         $2,899,056             $2,681,572

Total Delinquencies as a
percent of outstanding balance           2.20%                  2.32%

Direct Loans
Gross Balance Outstanding              $4,357,032            $4,771,275

Delinquencies

30 to 59 days                   50,199   1.15%         33,992   0.71%
60  to 89 days                   5,724   0.13%          5,081   0.11%
90 +  days                      40,987   0.94%          1,842   0.04%
                              ---------  -----        -------   -----
Total  Delinquencies           $96,910                $40,915

Total Delinquencies as a
percent of outstanding balance           2.22%                  0.86%


</TABLE>

       The  Company does not give significant consideration to  short-
term trends in delinquency when evaluating reserve levels. Delinquency
percentages  tend  to  be volatile and often are  not  necessarily  an
indication of future losses. The delinquency percentage for  Contracts
more  than  thirty days past due for the fiscal year ended  March  31,
2003 decreased to 2.20% from 2.32% for the fiscal year ended March 31,
2002.  The  delinquency percentage for direct loans more  than  thirty
days  past  due for the fiscal year ended March 31, 2003 increased  to
2.22% from 0.86% for the fiscal year ended March 31, 2002. The Company
estimates future portfolio performance by considering several factors.
The  most  significant factors are described as follows:  The  Company
analyzes  historical static pool performance for each branch  location
when  determining  appropriate reserve levels.  The  Company  utilizes
internal  branch  audits  as  an  indication  to  future  static  pool
performance: (See pg.7 "Underwriting Guidelines" for more  information
on  branch location audits) The Company also considers such things  as
the  current unemployment rate in markets the Company operates in, the
percentage  of  voluntary repossessions as compared to prior  periods,
the  percentage of bankruptcy filings as compared to prior periods and
other leading economic indicators.

<PAGE> 24

Income Taxes

      The  provision  for income taxes increased 9% to  $2,556,188  in
fiscal  2003 from $2,338,419 in fiscal 2002 primarily as a  result  of
higher pretax income. The Company's effective tax rate increased  from
37.29% in fiscal 2002 to 37.38% in fiscal 2003.


Net Income

      As  a  result  of the above factors, net income  increased  from
$3,932,139 in fiscal 2002 to $4,281,394 in fiscal 2003.


Liquidity and Capital Resources

The  Company's  cash flows for fiscal 2003 and 2002 are summarized  as
follows:

<TABLE>
<CAPTION>
                                      Fiscal        Fiscal
                                        2003           2002
                            --------------------------------------
<S>                               <C>              <C>
Cash provided by (used in):

  Operations                       $5,889,825       $7,291,571
  Investing activities -
   (primarily purchase of
    installment Contracts)        (12,611,588)     (13,166,260)
  Financing activities              7,151,735        5,605,733
                                  ------------------------------
  Net increase(decrease) in cash     $429,972        $(268,956)
                                  ==============================
</TABLE>


      The  Company's primary use of working capital during fiscal year
2003 was the funding of the purchase of Contracts.  The Contracts were
financed substantially through borrowings on the Company's $75 million
line  of credit.  The line of credit, which expires in November  2004,
is  secured primarily by Contracts, and available borrowings are based
on  a  percentage of qualifying Contracts. As of March  31,  2003  the
Company  had  approximately $15 million available under  the  line  of
credit. Since inception, the Company has also funded a portion of  its
working capital needs from cash flows from operating activities.

      The  self-liquidating nature of installment Contracts and  other
loans enables the Company to assume a higher debt-to-equity ratio than
in most businesses. The amount of debt the Company incurs from time to
time  under  these financing mechanisms depends on the Company's  need
for  cash and ability to borrow under the terms of its line of credit.
The  Company  believes that borrowings available  under  the  line  of
credit  as  well  as cash flow from operations and, if necessary,  the
issuance  of additional subordinated debt and or additional securities
in  the  capital  markets, will be sufficient to meet its  short  term
funding needs.

<PAGE> 25

Impact of Inflation

      The Company is affected by inflation primarily through increased
operating  costs  and expenses including increases in interest  rates.
Inflationary  pressures  on operating costs  and  expenses  have  been
offset by the Company's continued emphasis on stringent operating  and
cost  controls.  Management  believes  that  the  Company's  financial
position  has  enabled it to negotiate favorable  interest  rates.  No
assurances  can be given that the Company will be able to continue  to
do so in the future.

      The  Company believes the current downturn in the economy  would
increase  the  number  of  purchasers  of  automobiles  financed  with
Contracts.  During a modest downturn in economic activity more  people
will experience a reduction in income because of downsizing, fewer and
smaller  raises, and the necessity of accepting lower paying jobs.  In
addition,  it  may  be difficult for individuals who have  financially
over-extended themselves to meet their debt obligations and  they  may
find  it  necessary  to  purchase used rather  than  new  automobiles.
Although the number of potential customers can be expected to increase
during  periods of slow economic activity, the number of  defaults  in
payment  obligations can also be expected to increase with a resulting
increase in repossessions of vehicles securing Contracts.  The Company
believes  the net effect of such a continued downturn in  the  economy
would be unfavorable to the operating results of the Company.

Future Expansion

      The  Company currently intends to continue its expansion through
the  purchase of additional Contracts and the expansion of its  direct
consumer loan program.  In order to increase the size of the Company's
portfolio of Contracts, it will be necessary for the Company  to  open
additional branch offices and increase the size of its revolving  line
of  credit  arrangement,  either with its current  lender  or  another
lender.   The  Company,  from time to time, has  and  will  meet  with
private  investors  and  financial  institutions  that  specialize  in
investing  in subordinated debt. The Company also intends to  continue
its  policy of not paying dividends and using earnings from operations
to  purchase  Contracts  or make direct consumer  loans.  The  Company
believes  that opportunity for growth continues to exist  in  Florida,
Georgia,  North  Carolina, South Carolina  and  Ohio  and  intends  to
continue  its  expansion activities in those states.  The  Company  is
currently expanding its automobile financing program in the States  of
Michigan  and  South  Carolina.  The  Company  has  targeted   certain
geographic locations within these states where it believes there is  a
sufficient market for its automobile financing program. The Company is
currently purchasing Contracts utilizing employees who reside in these
states.  These employees are developing their respective  markets  and
the  Company  has  created a Central Buying Office  in  its  Corporate
Headquarters  to  purchase, process and service these  Contracts.  The
Company's  strategy  is  to monitor these new markets  and  ultimately
decide  where and when to open actual branch locations. No  assurances
can be given, however, that any further such expansion will occur.  As
of  the  date  of  this report, the Company is considering  opening  a
branch  location outside of Detroit, Michigan, although no  assurances
can be given as to whether the Company will do so. The Company is also
analyzing  other  markets  in States the Company  does  not  currently
operate in, however no assurance can be given that any expansion  will
occur in these new markets.

<PAGE> 26

Item 7. Financial Statements

The  following financial statements are filed as part of  this  report
(see pages 27-48)

  Report of Independent Certified Public Accountants..........27

  Audited Consolidated Financial Statements

  Consolidated Balance Sheets.................................28
  Consolidated Statements of Income...........................29
  Consolidated Statements of Shareholders' Equity.............30
  Consolidated Statements of Cash Flows.......................31
  Notes to Consolidated Financial Statements..................32

<PAGE> 27


     Report of Independent Certified Public Accountants

To the Board of Directors of
Nicholas Financial, Inc.

We have audited the accompanying consolidated balance sheets of
Nicholas Financial, Inc. and  subsidiaries as of March 31, 2003
and 2002, and  the related  consolidated  statements of income,
shareholders' equity and  cash flows for the  years then ended.
These  financial  statements  are  the  responsibility  of  the
Company's  management.  Our  responsibility  is  to  express an
 opinion on these financial statements based on our audits.

We conducted our  audits in  accordance with auditing standards
generally  accepted  in  the  United  States.  Those  standards
require that we plan and perform the audit to obtain reasonable
assurance about whether  the financial  statements  are free of
material  misstatement. An audit includes  examining, on a test
basis, evidence supporting the amounts and   disclosures in the
financial  statements.  An  audit  also includes  assessing the
accounting principles  used and  significant  estimates made by
management,  as  well  as   evaluating  the  overall  financial
statement  presentation.  We believe  that our audits provide a
reasonable basis for our opinion.

In  our  opinion,  the  financial  statements referred to above
present  fairly,  in  all  material  respects, the consolidated
financial position of Nicholas Financial, Inc. and subsidiaries
at  March 31,  2003  and  2002, and the consolidated results of
their operations  and their cash flows for the years then ended
in  conformity with accounting principles generally accepted in
the United States.

                                               /s/Ernst & Young



June 9, 2003
Tampa, Florida

<PAGE> 28

<TABLE>
<CAPTION>

            Nicholas Financial, Inc. and Subsidiaries
                   Consolidated Balance Sheets



                                                     March 31
                                                 2003         2002
                                            -------------------------
<S>                                        <C>          <C>
Assets
Cash	                                    $     481,211  $    51,239
Finance receivables, net                     86,178,112   76,067,387
Accounts receivable                              16,228       14,444
Assets held for resale                          319,788      227,008
Prepaid expenses and other assets               317,485      289,645
Property and equipment, net                     467,596      370,849
Deferred income taxes                         2,256,508      928,310
                                            -------------------------
Total assets                                $90,036,928  $77,948,882
                                            =========================

Liabilities and shareholders' equity
Line of credit                              $60,160,238  $53,273,426
Drafts payable                                  664,520      419,116
Notes payable-related party                     808,610      542,282
Accounts payable                              3,070,876    3,400,859
Derivatives                                   2,219,480    1,151,458
Income taxes payable                            105,875       69,852
Deferred revenues                               916,889      655,556
                                            -------------------------
Total liabilities                            67,946,488   59,512,549

Shareholders' equity:

Preferred stock, no par: 5,000,000 shares
 authorized;none issued and outstanding	            -            -
Common stock, no par: 50,000,000 shares
 authorized; 5,006,021 and 4,993,764 shares
 issued and outstanding, respectively         4,452,693    4,402,960
Other comprehensive loss	               (1,402,345)    (725,325)
Retained earnings                            19,040,092   14,758,698
                                            -------------------------
Total shareholders' equity                   22,090,440   18,436,333
                                            -------------------------
Total liabilities and shareholders' equity  $90,036,928  $77,948,882
                                            =========================

See accompanying notes.

</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>

            Nicholas Financial, Inc. and Subsidiaries
                Consolidated Statements of Income


                                               Year ended March 31
                                                2003         2002
                                            -------------------------
<S>                                        <C>           <C>
Revenue:
 Interest income on finance receivables     $22,048,535   $19,852,758
 Sales	                                    328,340       365,367
                                            ---------------------------
	                                       22,376,875    20,218,125
Expenses:
 Cost of sales                                   83,904        78,615
 Marketing                                      654,569       565,626
 Administrative                               8,460,662     7,302,275
 Provision for credit losses                  2,213,859     1,912,918
 Depreciation                                   190,257       189,733
 Interest expense                             3,936,042     3,898,400
                                            -------------------------
                                             15,539,293    13,947,567
                                            -------------------------
Operating income before income taxes          6,837,582     6,270,558

Income tax expense:
 Current                                      3,884,386     2,195,841
 Deferred                                    (1,328,198)      142,578
                                            -------------------------
                                              2,556,188     2,338,419
                                            -------------------------
Net income                                   $4,281,394    $3,932,139
                                            =========================

Earnings per share:
 Basic                                             $.86          $.81
                                            =========================
 Diluted                                           $.81          $.75
                                            =========================

Weighted average shares - basic               5,004,055     4,869,078
                                            =========================
Weighted average shares - diluted             5,299,206     5,263,966
                                            =========================



See accompanying notes.

</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
            Nicholas Financial, Inc. and Subsidiaries
         Consolidated Statement of Shareholders' Equity


                                                       Accumulated
                                                          Other         Total
                       Common Stock         Retained  Comprehensive  Shareholders'
                     Shares       Amount    Earnings      Loss          Equity
                    ---------------------------------------------------------------
<S>                 <C>        <C>         <C>         <C>           <C>
Balance at
 April 1, 2001       4,634,216  $3,601,292  $        -  $10,826,559   $14,427,851
Issuance of
 common stock           35,534      64,488           -            -        64,488
Issued in
 connection with
 services rendered      13,404      26,800           -            -        26,800
Repurchase and
 retirement of
 common stock           (1,000)     (3,550)          -            -        (3,550)
Issued in connection
 with employee bonus
 plan                      500       2,135           -            -         2,135
Shares issued in
 connection with the
 conversion of debt    311,110     711,795           -            -       711,795
Net Income                   -           -           -    3,932,139     3,932,139
Mark to market -
 interest rate swaps         -           -    (725,325)           -      (725,325)
                                                                      -------------
Total comprehensive
 income                      -           -           -            -     3,206,814
                    ---------------------------------------------------------------
Balance at
 March 31, 2002      4,993,764   4,402,960    (725,325)  14,758,698    18,436,333
                    ---------------------------------------------------------------
Issuance of common
 stock                  21,667      47,717           -            -        47,717
Issued in connection
 with services
 rendered                   90         405           -            -           405
Repurchase and
 retirement of
 common stock           (9,500)    (38,012)          -            -       (38,012)
Income tax benefit
 on exercise of
 non-qualified
 stock options               -      39,623           -            -        39,623
Net income                   -           -           -    4,281,394     4,281,394
Mark to market -
 interest rate swaps         -           -    (677,020)           -      (677,020)
                                                                      -------------
Total comprehensive
 income                      -           -           -            -     3,604,374
                    ---------------------------------------------------------------
Balance at
 March 31, 2003      5,006,021  $4,452,693 $(1,402,345) $19,040,092   $22,090,440
                    ===============================================================



See accompanying notes.

</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>

            Nicholas Financial, Inc. and Subsidiaries
              Consolidated Statements of Cash Flows


                                                Year ended March 31
                                                2003           2002
                                           ---------------------------
<S>                                        <C>            <C>
Cash flows from operating activities
Net income                                  $ 4,281,394    $ 3,932,139
Adjustments to reconcile net income to net
 cash provided by operating activities:
  Depreciation                                  190,257        189,733
  Provision for credit losses                 2,213,859      1,912,918
  Deferred income taxes                        (917,635)       582,433
  Changes in operating assets and
   liabilities:
  Accounts receivable                            (1,784)            24
  Prepaid expenses and other assets            (120,620)        32,533
  Accounts payable                             (298,406)       589,843
  Drafts payable                                245,404         32,088
  Income taxes payable                           36,023        (23,967)
  Deferred revenues                             261,333         43,827
                                           ---------------------------
Net cash provided by operating activities     5,889,825      7,291,571

Investing activities
Purchase and origination of finance
 contracts                                  (60,795,789)   (56,104,016)
Principal payments received                  48,471,205     43,164,579
Purchase of property and equipment,
 net of disposals                              (287,004)      (226,823)
                                           ---------------------------
Net cash used in investing activities       (12,611,588)   (13,166,260)

Financing activities
Issuance of notes payable-related party         215,595         83,000
Net proceeds from line of credit              6,886,812      5,450,000
Sale of common stock                             49,328         72,733
                                           ---------------------------
Net cash provided by financing activities     7,151,735      5,605,733
                                           ---------------------------

Net increase (decrease) in cash                 429,972       (268,956)
Cash, beginning of year                          51,239        320,195
                                           ---------------------------
Cash, end of year                          $    481,211   $     51,239
                                           ===========================

Supplemental disclosure of noncash
 investing and financing activities
Stock issued in connection with services
 rendered                                  $        405   $     26,800
                                           ===========================
Conversion of debt to common stock                    -   $    700,000
                                           ===========================
Conversion of accrued interest to notes
 payable - related party                   $     50,733   $    191,274
                                           ===========================


See accompanying notes.

</TABLE>
<PAGE> 32

            Nicholas Financial, Inc. and Subsidiaries
           Notes to Consolidated Financial Statements
                         March 31, 2003

1. Organization

Nicholas Financial, Inc. (NFI, Canada or the Company) is a Canadian
holding  company incorporated  under the  laws  of British Columbia
with  two  wholly-owned United States  subsidiaries,  Nicholas Data
Services, Inc.  (NDS) and  Nicholas Financial, Inc.  (NFI).  NDS is
engaged  principally in  the development,  marketing and support of
computer  application  software.  NFI  is  engaged  principally  in
providing  installment sales  financing. Both NDS and NFI are based
in Florida, U.S.A. The accompanying financial statements are stated
in  U.S. dollars and are  presented  in accordance  with accounting
principles generally accepted in the United States.

2. Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements  include the accounts of NFI,
Canada and its wholly-owned subsidiaries, NDS and NFI, collectively
referred  to  as the  Company. All  intercompany  transactions  and
balances have been eliminated.

Finance Receivables

Finance receivables purchased and  originated are recorded at cost.

Assets Held for Resale

Assets  held for  resale are  stated  at net  realizable  value and
consist  primarily  of  automobiles  that  have  been   repossessed
by  the  Company  and  are awaiting  final disposition. Automobiles
repossessed are charged-off in the month in which the  repossession
occurred. Costs associated with repossession, transport and auction
preparation  expenses are charges reported under operating expenses
in the  period in which they  were incurred.  The Company maintains
full responsibility for repossessions.

Property and Equipment

Property  and  equipment are recorded  at cost.   Expenditures  for
repairs  and  maintenance  are  charged  to  expense  as  incurred.
Depreciation  of  property  and  equipment  is  computed  using the
straight-line  method over the estimated useful lives of the assets
as follows:

           Automobiles                   3 years
           Equipment                     5 years
           Furniture and fixtures        7 years
           Leasehold improvements     Lease term


<PAGE> 33

        Nicholas Financial, Inc. and Subsidiaries
      Notes to Consolidated Financial Statements (continued)

Allowance for Loan Losses

The  allowance  for  loan  losses  is  increased by charges against
earnings  and decreased  by  charge-offs  (net of recoveries).   In
addition  to the  allowance for loan  losses, a  reserve for credit
losses  has  been established  using unearned  interest  and dealer
discounts  to absorb potential  credit losses. To the extent actual
credit  losses  exceed  these  reserves,  a bad  debt  provision is
recorded; and to the extent credit losses are less than the reserve,
the reserve  is accreted  into income  over the remaining estimated
life of the pool. Management's periodic evaluation of the  adequacy
of the allowance  is based on the  Company's past  loan experience,
known and inherent  risks in the portfolio, adverse situations that
may  affect the borrower's ability to repay, the estimated value of
any underlying collateral, and current economic conditions.

Drafts Payable

Drafts payable represent checks disbursed  for loan purchases which
have not  yet been funded  through  the  line  of  credit.  Amounts
cleared  within one to  two business  days of period  end are  then
added to the line of credit.

Income Taxes

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and  liabilities are  recognized for the future
tax consequences attributable to differences  between the financial
statement  carrying amounts of  existing assets and liabilities and
their  respective  tax  bases  and operating  loss and  tax  credit
carryforwards.  Deferred tax  assets and  liabilities  are measured
using enacted  tax rates expected to apply to taxable income in the
years  in which those temporary  differences  are  expected  to  be
recovered  or settled.  The  effect  on  deferred  tax  assets  and
liabilities of a change in tax rate is recognized in  income in the
period that includes the enactment date.

Revenue Recognition

Interest  income  on finance  receivables is  recognized  using the
interest  method. Accrual of interest income on finance receivables
is suspended when a loan is contractually delinquent for 60 days or
more or the collateral is repossessed, whichever is earlier.  As of
March 31, 2003  and  March 31, 2002  the amount  of  gross  finance
receivables  not  accruing  interest  was  $575,554  and  $424,827,
respectively.


<PAGE> 34

        Nicholas Financial, Inc. and Subsidiaries
      Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Deferred  revenues consist  primarily of  commissions received from
the sale  of ancillary  products. These products include automobile
warranties,  road-side  assistance  programs,   accident  &  health
insurance,  credit life  insurance  and  forced  placed  automobile
insurance.  These commissions are  amortized  over  the life of the
contract using the effective annual interest method.

The Company attributes its entire dealer discount and a portion  of
unearned income to a reserve for credit losses. Such amounts reduce
the interest income recognized over  the life of the contract.  The
Company  receives a  commission  for  selling  add-on  services  to
consumer borrowers and amortizes the commission, net of the related
costs,  over the  term of  the  loan  using  the  interest  method.
The Company's net fees charged for processing a loan are recognized
as an  adjustment to the  yield and  are amortized over the life of
the loan using the interest method.

The amount  of  future unearned  income  represents  the amount  of
finance charges the Company expects to fully earn over the  life of
the  current portfolio,  and is computed  as  the  product  of  the
contract  rate,  the contract  term, and the  contract amount.  The
Company  aggregates the  contracts purchased  during  a three-month
period  for all  of its  branch  locations.  After  the analysis of
purchase  date  accounting is complete,  any uncollectable  amounts
would be contemplated in estimating the allowance for credit losses.

Revenues resulting  from the  sale of  hardware  and  software  are
recognized  when  persuasive  evidence   of  an  agreement  exists,
delivery  of  the products  has  occurred,  no significant  Company
obligation with  regard to implementation  remain, the fee is fixed
or determinable and collectibility is probable. If the fee due from
the customer is not fixed or determinable, revenue is recognized as
payments become due from the customer.

If collectibility is not considered probable, revenue is recognized
when the  fee is  collected. Arrangements  that  included  software
services  are evaluated  to determine whether  those  services  are
essential to the functionality of other elements of the arrangement.
When software services are considered essential,  revenue under the
arrangement is recognized using contract accounting.  When software
services  are not considered  essential, the revenue related to the
software services is recognized as the services are performed.  The
unamortized amounts are included in the caption "deferred revenues."


<PAGE> 35

        Nicholas Financial, Inc. and Subsidiaries
      Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)


Earnings Per Share

Basic  earnings per share excludes any dilutive effects  of common
stock equivalents  such  as  options,  warrants,  and  convertible
securities.  Diluted  earnings per share  includes the  effects of
dilutive options, warrants, and convertible securities.  Basic and
diluted earnings per share have been computed as follows:

<TABLE>
<CAPTION>
                                                Year ended March 31
                                                 2003          2002
                                            ----------------------------
<S>                                           <C>           <C>
Numerator:
Numerator for basic earnings per share -
 Net income available to common stockholders   $4,281,394    $3,932,139
Effect of dilutive securities:
Convertible debt                                        -        17,491
                                            ----------------------------
Numerator for dilutive earnings per share -
 income available to common stockholders
 after assumed conversions	               $4,281,39     $3,949,630
                                            ============================
Denominator:
 Denominator for basic earnings per share -
  weighted average shares                      5,004,055      4,869,078
 Effect of dilutive securities:
    Employee stock options                       295,151        292,956
    Convertible debt                                   -        101,932
                                            ----------------------------
 Denominator for diluted earnings per
  share - adjusted weighted-average
  shares and assumed conversions               5,299,206      5,263,966
                                            ============================
Earnings per share - basic                          $.86           $.81
                                            ============================
Earnings per share - diluted                        $.81           $.75
                                            ============================

</TABLE>

Stock Option Accounting

The Company has elected to follow Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees (APB 25) and related
interpretations  in accounting for  its stoc k option  grants and  to
present   the   disclosure  requirements  relating  to  stock - based
compensation  plans required by  Financial Accounting Standards Board
Statement No. 123, Accounting for Stock-Based Compensation (FAS 123).


<PAGE> 36

        Nicholas Financial, Inc. and Subsidiaries
      Notes to Consolidated Financial Statements (continued)


2. Summary of Significant Accounting Policies (continued)

In December 2002,  the Financial Accounting Standards Board  ("FASB")
issued   Statement  of    Financial  Accounting    Standards No. 148,
Accounting  for Stock-Based  Compensation-Transition  and  Disclosure
(FAS 148) which amends FAS 123.  FAS 148 provides alternative methods
of transition for  a voluntary change to the  fair value based method
of accounting  for stock-based-employee  compensation.   FAS 148 also
amends  the  disclosure  requirements  of  FAS 123  to  require  more
prominent  and  more  frequent  disclosures  in  financial statements
concerning the effects of  stock-based  compensation.   The effective
date of FAS 148 is for fiscal years ending after December 15, 2002.

The following table illustrates the effect on net income and earnings
per share  if  the Company  had  applied the  fair value  recognition
provisions of FAS 123:

<TABLE>
<CAPTION>
                                                Year ended March 31
                                                   2003          2002
                                            ----------------------------
<S>                                           <C>           <C>
Net income                                     $4,281,394    $3,932,139
  Basic earnings per share                          $0.86         $0.81
  Fully diluted earnings per share                  $0.81         $0.75
Stock based employee compensation cost
  under the Fair Value Method                     $69,932      $102,825
Pro forma net income                           $4,211,462    $3,829,314
  Pro forma basic earnings per share                $0.84         $0.79
  Pro forma fully diluted earnings per share        $0.79         $0.73


</TABLE>


The effects  of applying  FAS 123 for  pro-forma  disclosures are  not
likely to be representative of the effects on reported  net income for
future years.

The fair value of each  option  granted is  estimated  on the  date of
grant using the Black-Scholes  option-pricing model with the following
weighted-average  assumptions  used for grants in 2002 were:  expected
volatility of 39%,  risk-free interest rate of 4.92% and expected life
of 7 years. No options were granted in 2003.


<PAGE> 37

        Nicholas Financial, Inc. and Subsidiaries
      Notes to Consolidated Financial Statements (continued)


2. Summary of Significant Accounting Policies (continued)

Financial Instruments

The Company's  financial instruments  consist of  finance  receivables,
accounts receivable,  line of credit,  notes  payable-related party and
accounts payable. For each of these financial instruments, the carrying
value approximates its fair value.

The Company's financial instruments that  are exposed to concentrations
of credit risk are primarily finance receivables which are concentrated
in the states of Florida, Georgia, North Carolina, South Carolina, Ohio
and Michigan.  The Company provides  credit during the normal course of
business and performs  ongoing credit evaluations of it customers.  The
Company  maintains allowances  for potential credit  losses which, when
realized, have been within the range of management's expectations.  The
Company perfects a primary security interest  in all vehicles  financed
as a form of collateral.

Use of Estimates

The  preparation  of  the  financial  statements  in  conformity   with
accounting principles generally accepted in the United States  requires
management to make estimates and a ssumptions that  affect  the amounts
reported in the financial statements and  accompanying notes.  The most
significant  of these  estimates relates  to the  determination  of the
allowance for credit losses and related reserves.  Actual results could
differ from those estimates.

Accumulated Other Comprehensive Income

Prior to the adoption of  Statement  of Financial  Accounting  Standard
No. 133,  Accounting  for Derivative Instruments and Hedging Activities
(FAS 133),  as amended,  comprehensive net income  equaled  net income.
Accumulated other comprehensive loss  is composed entirely  of the fair
value of cash flow hedges, net of the related tax effect.

Statement of Cash Flows

Cash paid for income taxes for the years ended  March 31, 2003 and 2002
was approximately $2,520,165 and  $1,780,000,  respectively.  Cash paid
for  interest  for  the  years  ended  March  31,  2003  and  2002  was
approximately $3,743,113 and $3,972,000, respectively.

Reclassification

Certain prior year amounts have been  reclassified to  conform  to  the
2003 presentation.


<PAGE> 38

        Nicholas Financial, Inc. and Subsidiaries
      Notes to Consolidated Financial Statements (continued)


2. Summary of Significant Accounting Policies (continued)

Derivatives

On April 1, 2001,  the  Company adopted FAS 133.  FAS 133  requires the
recognition  of  all   derivative  instruments  as   either  assets  or
liabilities  in  the consolidated  balance  sheet at  fair value.   The
accounting for changes in the fair value  (i.e., gains or losses) of  a
derivative  instrument  depends on  whether it has  been designated and
qualifies as part of a hedging relationship and further, on the type of
hedging  relationship.   For  those  derivative  instruments  that  are
designated and qualify as hedging instruments, a company must designate
the hedging instrument, based on the exposure being hedged, as either a
fair value hedge, cash flow hedge,  or a hedge of a net investment in a
foreign operation.  The Company does not use derivative instruments for
speculative purposes.

Recent Accounting Pronouncement

In  August 2001,  the  FASB  issued  FAS No. 144,  Accounting  for  the
Impairment  or  Disposal  of  Long-Lived  Assets  (FAS 144),  which  is
effective for fiscal periods  beginning after  December 15, 2001.  This
statement  superseded  FAS 121,    Accounting  for  the  Impairment  of
Long-Lived  Assets  and  for  Long-Lived Assets  to be Disposed Of. The
accounting  model  for  long - lived  assets to be disposed of by sales
applies to all long-lived assets, including  discontinued   operations,
and replaced  the  provisions  of  Accounting  Principles  Board  (APB)
Opinion No. 30,   Reporting  the  Results of Operations - Reporting the
Effects of  Disposal  of  a  Segment  of a Business, and Extraordinary,
Unusual and  Infrequently  Occurring  Events  and Transactions, for the
disposal  of a segment of a business. Under the provisions of APB 30, a
segment of a business to be disposed of was  measured  at  the lower of
its carrying  amount  or  net  realizable  value, adjusted for expected
future operating losses, whereas FAS 121 used fair  value  less cost to
sell  and  excluded   future   operating   losses  from  the  framework
established  in  FAS  121,  for  long-lived  assets  to  be disposed of
by sale. FAS No. 144 requires that those long-lived assets  be measured
at  the  lower  of the carrying amount or fair value less cost to sell,
whether   reported   in   continuing   operations  or  in  discontinued
operations.   Therefore, discontinued  operations  will  no  longer  be
measured  at  net  realizable  value  or  include amounts for operating
losses  that  have  not  yet  occurred.  FAS  No. 144 also broadens the
reporting  for  discontinued operations to include all components of an
entity  with  operations that can be distinguished from the rest of the
entity and that will  be  eliminated from the ongoing operations of the
entity  in a disposal transaction. The adoption of FAS 144 did not have
a  material  impact  on  the  earnings  and  financial  position of the
Company.

<PAGE> 39


3. Finance Receivables

The Company  purchases  individual installment loan contracts from  new
and  used  automobile  dealers in its markets. There is no relationship
between  the  Company  and  the dealer with respect to a given contract
once  the  assignment  of  that contract is complete. The dealer has no
vested  interest  in  the  performance  of any installment contract the
Company purchases.

The Company charges-off  receivables  when  an  individual  account has
become  more  than 120 days contractually delinquent. In the event of a
repossession  the  charge-off  will  occur  in  the  month in which the
vehicle was repossessed.

Consumer  automobile  finance  installment  contracts  are  included in
finance receivables and are detailed as follows:

<TABLE>
<CAPTION>
                                      As of March 31,
                                  2003              2002
                             ---------------------------------
<S>                          <C>               <C>
Finance receivables, gross 	$132,316,816	$115,683,683
Less:
  Unearned interest            (31,610,003)      (27,783,082)
                              --------------------------------
                               100,706,813        87,900,601
  Dealer discounts             (12,394,089)      (11,259,898)
  Allowance for credit losses   (5,428,681)       (4,105,174)
                             ---------------------------------
  Finance receivables, net    $ 82,884,043      $ 72,535,529
                             =================================

</TABLE>

The terms  of  the  receivables  range from 12 to 66 months and  bear a
weighted average effective interest rate of 24% for both 2003 and 2002,
respectively.

Direct consumer loans are also included in finance  receivables and are
detailed as follows:

<TABLE>
<CAPTION>

                                       As of March 31,
                                    2003             2002
                               --------------------------------
<S>                            <C>              <C>
Direct loans, gross             $ 4,357,032      $ 4,771,275
 Less:
   Unearned interest               (886,837)      (1,038,805)
                                ------------------------------
                                  3,470,195        3,732,470
   Allowance for credit losses     (176,126)        (200,612)
                                ------------------------------
   Finance receivables, net     $ 3,294,069     $  3,531,858
                                ==============================

</TABLE>

<PAGE> 40


3. Finance Receivables (continued)

The terms  of  the  receivables  range  from  6 to 48 months and bear a
weighted average effective interest rate of 25% for both 2003 and 2002,
respectively.

The  following  table  sets  forth  a  reconciliation of the changes in
dealer discount for the years ended March 31:

<TABLE>
                                             As of March 31,
                                        2003                2002
                                   -----------------------------------
<S>                                <C>                 <C>
Balance at beginning of year        $11,259,898         $10,306,699
Discounts acquired on new volume     10,534,472           9,384,892
Losses absorbed                      (8,401,071)         (6,536,368)
Recoveries                            1,068,556             886,451
Reserves accreted                    (2,067,766)         (2,781,776)
                                   ----------------------------------
Balance at end of year              $12,394,089         $11,259,898
                                   =================================

Reserve as a percent of gross
 finance receivables                      9.37%               9.73%
                                   =================================

</TABLE>


The  following table  sets  forth  a  reconciliation of the changes  in
the  allowance  for  credit  losses  on  consumer  automobile   finance
installment contracts for the years ended March 31:

<TABLE>
<CAPTION>
                                          As of March 31,
                                       2003            2002
                                  -------------------------------
<S>                               <C>                <C>
Balance at beginning of year       $4,105,174         $3,145,470
Current year provision              1,911,855          1,728,786
Losses absorbed                      (588,348)          (769,082)
                                  -------------------------------
Balance at end of year             $5,428,681         $4,105,174
                                  ===============================

Reserve as a percent of
 gross finance receivables              4.10%              3.55%
                                  ===============================

</TABLE>

<PAGE> 41


3. Finance Receivables (continued)

The following table sets forth a reconciliation of the changes in the
allowance for credit losses on direct loans for the years ended March
31:

<TABLE>
                                      2003          2002
                                  ---------------------------
<S>                                <C>           <C>
Balance at beginning of year        $200,612      $319,545
Current year provision               302,004       184,132
Losses absorbed                     (208,802)     (177,012)
Recoveries                            29,372        15,676
Accreted to income                  (147,060)     (141,729)
                                   -------------------------
Balance at end of year              $176,126      $200,612
                                   =========================
Reserve as a percent of
 gross finance receivables             4.04%         4.20%

</TABLE>

<PAGE> 42


4. Property and Equipment


<TABLE>
<CAPTION>

                                 Accumulated    Net Book
                         Cost    Depreciation    Value
                      -------------------------------------
<S>                  <C>           <C>         <C>
2003
Automobiles            $285,680     $146,312    $139,368
Equipment               515,210      373,457     141,753
Furniture and fixtures  234,828      130,672     104,156
Leasehold improvements  274,025      191,706      82,319
                      -------------------------------------
                     $1,309,743     $842,147    $467,596
                     =====================================
2002
Automobiles            $262,238     $119,149    $143,089
Equipment               449,007      319,664     129,343
Furniture and fixtures  176,256      112,033      64,223
Leasehold improvements  187,637      153,443      34,194
                      ------------------------------------
                     $1,075,138    $ 704,289   $ 370,849
                     ====================================

</TABLE>


5. Line of Credit

The Company has a $75,000,000 line of credit facility (the Line) with Bank
of America,  of  which  approximately $60,000,000 was outstanding at March
31, 2003. Borrowings  under  the Line bear interest at the Bank of America
prime  rate plus 25 basis points or several Libor pricing options. Pledged
as collateral  for  this  credit facility are all of the assets of NFI and
NDS.  The  Line  expires  on  November  30, 2004. As of March 31, 2003 the
Company was in compliance with all of its Line covenants.

The Company is party to interest rate swap agreements which are derivative
instruments. For derivative instruments that are designated and qualify as
a  cash  flow hedge (i.e., hedging the exposure to variability in expected
future  cash  flows  that  is  attributable  to a particular risk, such as
interest  rate  risk),  the  effective  portion of the gain or loss on the
derivative  instrument  is reported as a component of comprehensive income
and  reclassified into earnings in the same period or periods during which
the hedged transaction affects earnings. The remaining gain or loss on the
derivative instrument in excess  of  the  cumulative change in the present
value  of  the future cash flows of the hedged item, if any, is recognized
in current earnings during the period of change.

<PAGE> 43


5. Line of Credit (continued)

The  Company  has  entered  into  interest  rate   swap   agreements  that
effectively  convert  a  portion of its floating-rate debt to a fixed-rate
basis,  thus  reducing  the  impact  of  interest  rate  changes on future
interest  expense.  At  March  31, 2003,  approximately $50,000,000 of the
Company's  borrowings have been designated as the hedged items to interest
rate  swap  agreements. Under the swap agreements, the Company received an
average  variable  rate  of  3.90% and paid an average fixed rate of 6.86%
during  the year ended March 31, 2003. A loss of $1,402,345 related to the
fair value of the swaps at March 31, 2003 has been recorded in the caption
derivatives  on  the  balance  sheet. Amounts of  net losses on derivative
instruments  expected  to  be  reclassified  from  comprehensive income to
earnings  in  the  next  12  months  are  not expected to be material. The
Company has also entered into three forward locking swaps disclosed in the
table below.


<TABLE>
<CAPTION>
                                    Notional     Fixed Rate
Date Entered	Effective Date	 Amount	Of Interest Maturity Date
--------------------------------------------------------------------------
<S>               <C>              <C>          <C>     <C>
August 19, 1999    August 19, 1999 $10,000,000  5.80%   August 1, 2003
May 17, 2000       May 17, 2000     10,000,000  6.87%   May 17, 2004
March 30, 2001     March 30, 2001   10,000,000  4.89%   April 2, 2003
October 5, 2001    October 5, 2001  10,000,000  3.85%   October 5, 2004
June 28, 2002      June 28, 2002    10,000,000  3.83%   July 2, 2005
January 6, 2003    April 2, 2003    10,000,000  3.35%   April 2, 2007
January 31, 2003   August 1, 2003   10,000,000  3.20%   August 2, 2006
February 26, 2003  May 17, 2004     10,000,000  3.91%   May 19, 2008


</TABLE>

The Company has also entered into various interest rate option agreements
with maturities through May 17, 2004.

The Company utilizes the above noted interest rate  swaps   to manage its
interest rate  exposure.  The  swaps effectively convert a portion of the
Company's  floating  rate debt to a fixed rate, more closely matching the
interest rate characteristics of the Company's finance receivables. There
has  historically  been  no ineffectiveness associated with the Company's
hedges.

<PAGE> 44


6. Notes Payable-Related Party

Notes payable to shareholders, directors and individuals related thereto
at March 31:

The Company has unsecured notes totaling $808,610 and  $542,282  for 2003
and 2002, respectively. The notes bear an interest  rate of 8.87% and are
due upon 30-day demand.

The company incurred interest expense on the above notes of approximately
$62,000   and   $80,000  for  the  years  ended  March 31,  2003 and 2002
respectively.

7. Income Taxes

The provision for income taxes reflects  an effective U.S tax rate, which
differs from the corporate tax rate (34%) for the following reasons:

<TABLE>
<CAPTION>
                                          2003         2002
                                      --------------------------
<S>                                   <C>           <C>
Provision for income taxes
 at federal statutory rate             $2,324,778    $2,131,990
Increase resulting from:
State income taxes, net
 of federal benefit                       258,686       228,701
Other                                     (27,276)      (22,272)
                                      ---------------------------
                                       $2,556,188    $2,338,419
                                      ===========================

</TABLE>

<PAGE> 45


7. Income Taxes (continued)

The Company's deferred tax assets consist of the following as of March 31:

<TABLE>
<CAPTION>
                                        2003          2002
                                     -------------------------
<S>                                 <C>             <C>
Allowance for credit losses
 not currently deductible
 for tax purposes                    $1,379,024      $372,927
Derivatives                             850,418       439,855
Other items                              27,066       115,528
                                     --------------------------
                                     $2,256,508      $928,310
                                     ==========================
</TABLE>


The deferred tax asset related to derivatives represents the tax effect at
37.38% of the fair value adjustment discussed in Footnote 5.

NFI, Canada has income  tax  loss  carryforward  balances of approximately
Cdn$318,000 (2002-Cdn$318,000)   which  are  available  to  reduce  future
taxable income. The  related  deferred  tax  asset , more likely than not,
will not be realized and  is  offset  entirely  by  a valuation allowance.
The  tax  loss  carryforwards  are  the  result  of  the  Company's annual
Canadian  operating  expenses  not  deductible  for  U.S.    tax purposes.
The  Company  has  no  operations  in Canada, does not expect to have such
operations  and  therefore  does  not  create  any revenue to offset these
income tax loss carryforwards.

8. Shareholders' Equity

The Company  has  an employee stock incentive plan (the SIP) for officers,
directors and key  employees  under  which  590,266 shares of common stock
were reserved for issuance as of March 31, 2003. Options currently granted
by the Company generally vest over a five-year period.

Prior to the adoption of FAS 148, the Company had elected to follow APB 25,
and related  Interpretations  in  accounting for its employee stock options
because  the  alternative, fair  value  method , provided for under FAS 123
requires  use of option valuation models that were not developed for use in
valuing  employee stock options. Under APB 25, if the exercise price of the
Company's  employee stock options equals the market price of the underlying
stock on the date of grant, no compensation expense is recognized.


<PAGE> 46


8. Shareholders' Equity (continued)

The following table reflects activity within the SIP for the years noted:

<TABLE>
<CAPTION>
                                       2003                  2002
                            -----------------------------------------------
                                           Weighted              Weighted
                                           Average               Average
                             Options &     Exercise  Options &   Exercise
                             Warrants      Price     Warrants    Price
                            -----------------------------------------------
<S>                       <C>            <C>         <C>        <C>
Outstanding-beginning
  of year	               653,866	      $2.26	      599,400    $2.01
Granted                          -            -       131,000     3.38
Exercised                  (21,667)        2.20       (35,534)    1.81
Canceled/expired           (41,933)        2.90       (41,000)    2.52
                          ---------                  ----------
Outstanding-end
 of year                   590,266         2.21       653,866     2.26
                          =========                  =========
Exercisable at
 end of year               490,776        $2.03       403,045    $1.89
                          =========                  =========

Weighted-average fair value of
 options granted during the year		    -                  $1.52

</TABLE>


<TABLE>
<CAPTION>
			           Weighted       Currently Exercisable
                             Weighted    Average                      Weighted
                             Average     Remaining                    Average
                             Exercise    Contractual                  Exercise
                 Shares      Price        Life           Shares        Price
-------------------------------------------------------------------------------
<S>             <C>         <C>       <C>              <C>            <C>
$1.00 to 1.99    310,600     $1.70     5.20 years        304,039       $1.70
 2.00 to 2.99    185,666      2.46     7.10 years        159,604        2.43
 3.00 to 3.99     94,000      3.39     8.32 years         27,133        3.40
-------------------------------------------------------------------------------
Total            590,266     $2.21     6.20 years        490,776       $2.03
                =========                              ==========

</TABLE>


<PAGE> 47

9. Employee Benefit Plans

The Company has a 401(k) profit sharing plan under which all employees  are
eligible  to  participate. Employee contributions are voluntary and subject
to Internal  Revenue  Service  limitations.  The  Company matches, based on
annually  determined  factors, employee contributions provided the employee
completes certain levels of service annually. For the years ended March 31,
2003  and  2002, the Company recorded expenses of approximately $68,000 and
$59,000, respectively,  related  to  this  plan.  All  employees  who  were
eligible under the plan received  a  profit  sharing  contribution based on
their  total  compensation  in  relation  to  the total compensation of all
eligible  employees. For  the  years  ended  March  31,  2003 and 2002, the
Company  recorded expenses of  $139,000 and $116,000, respectively, related
to this plan.

10. Commitments

The Company leases its corporate and branch offices  under  operating lease
agreements which provide for annual minimum rental payments as follows:

Year ending March 31:

      2004                      $497,647
      2005                       319,089
      2006                       210,231
      2007                        59,091
      2008                        14,940
                              -----------
                              $1,100,998
                             ============

Rent expense for the years ended March 31, 2003 and 2002 was approximately
$503,000 and $404,000, respectively.

<PAGE> 48


11. Segment Information

The segments presented have been identified based on the difference in the
products  and  services  of  the  Company's two wholly owned subsidiaries.
Internal  financial  results  for  each  subsidiary  are  presented to and
reviewed by the senior management of the Company. Substantially all of the
Company's  operations  are in the United States. The industry segments are
as follows:

<TABLE>
<CAPTION>
                                         Computer
                                         Application
                             General     Software and
                             Financing   Support         Corporate     Total
                          ---------------------------------------------------
<S>                       <C>            <C>             <C>       <C>
2003
Interest income and sales   $22,048,535   $328,340              -   $22,376,875
Operating income (loss)
 before income taxes	      6,845,591     (8,009)             -     6,837,582
Interest expense              3,936,042          -              -     3,936,042
Income tax expense            2,559,212     (3,024)             -     2,556,188
Identifiable assets          89,772,818    262,735          1,375    90,036,928
Net capital expenditures        287,004          -              -       287,004
Depreciation                    190,257          -              -       190,257

2002
Interest income and sales   $19,852,758   $365,367              -   $20,218,125
Operating income (loss)
 before income taxes          6,281,966    (11,408)             -     6,270,558
Interest expense              3,898,400          -              -     3,898,400
Income tax expense            2,342,725     (4,306)             -     2,338,419
Identifiable assets          77,729,928    213,382          5,572    77,948,882
Net capital expenditures        226,823          -              -       226,823
Depreciation                    189,725          8              -       189,733

</TABLE>



<PAGE> 49

Item 8. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure

     None.

                              PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons

     The information set forth under the caption "Proposal 1: Election
of  Directors" in the Proxy Statement and Information Circular,  dated
on  or  about  July  9, 2003, for the 2003 Annual General  Meeting  of
Members  of  the  Company  to  be held  August  6,  2003  (the  "Proxy
Statement"),  the  information set forth under the caption  "Executive
Officers and Compensation" in the Proxy Statement, and the information
set  forth  under  the  caption "Section 16 (a)  Beneficial  Ownership
Reporting  Compliance" in the Proxy Statement are incorporated  herein
by reference.


Item 10. Executive Compensation

      The information set forth under the caption  "Executive Officers
and  Compensation"  in the Proxy Statement is incorporated  herein  by
reference.

<PAGE> 50

Item  11.  Security Ownership of Certain Beneficial Owners, Management
and Related Stockholder Matters

      The  information set forth under the caption "Voting Shares  and
Ownership  of Management and Principal Holders" in the Proxy Statement
is incorporated herein by reference.

     Securities Authorized for Issuance Under Equity Compensation
Plans

The  following table sets forth certain information, as of  March  31,
2003, with respect to compensation plans under which equity securities
of the Company are authorized for issuance:

<TABLE>
<CAPTION>

                 EQUITY COMPENSATION PLAN INFORMATION
<S>                <C>            <C>              <C>
                    Number of                        Number of
                    Securities                       Securities
                    to be                            Remaining
                    Issued         Weighted -        Available for
                    Upon           Average           Future Issuance
                    Exercise       Exercise          Under Equity
                    of             Price of          Compensation
                    Outstanding    Outstanding       Plans (Excluding
                    Options,       Options,          Securities
                    Warrants       Warrants          Reflected in
  Plan Category     and Rights     and Rights        Column (a)
---------------------------------------------------------------------------
                       (a)             (b)                 (c)
 Equity Compensation
 Plans Approved by
 Security Holders     590,266          $2.21              349,734

 Equity Compensation
 Plans Not Approved
 by Security Holders    Nil             Not                 Nil
                                    Applicable
                     -----------------------------------------------
      TOTAL           590,266          $2.21              349,734
                     ===============================================

</TABLE>

Item 12.  Certain Relationships and Related Transactions

       The   information   set  forth  under  the   caption   "Certain
Relationships  and  Related Transactions" in the  Proxy  Statement  is
incorporated herein by reference.



<PAGE> 51

Item 13.       Exhibits and Reports on Form 8-K

 (a)  Exhibits

Exhibit No.   Exhibit Description

3.1      Articles of Incorporation and By-Laws of Nicholas Financial,
         Inc. Incorporated by reference to the  Company's Form  10-SB
         (File No. 0-26680) filed on March 13, 1996

4.1      Stock Certificate

         Incorporated by reference to Exhibit 4.1 to the Company's
         Form 10- SB (File No. 0-26680) filed on March 13, 1996

10.1.1   Loan  and Security Agreement dated March 31, 1993  between
         BA Business Credit, Inc. and Nicholas Financial, Inc.

         Incorporated by reference to Exhibit 10.1.1 to the Company's
         Form 10-SB (File No. 0-26680) filed on March 13, 1996

10.1.2   Amendment No. 1 to Loan Agreement dated January 14, 1994

         Incorporated by reference to Exhibit 10.1.2 to the Company's
         Form 10-SB (File No. 0-26680) filed on March 13, 1996

10.1.3   Temporary Line Increase Agreement dated Mach 28, 1994

         Incorporated by reference to Exhibit 10.1.3 to the Company's
         Form 10-SB (File No. 0-26680) filed on March 13, 1996

10.1.4   Amendment No. 2 to Loan Agreement dated June 3, 1994

         Incorporated by reference to Exhibit 10.1.4 to the Company's
         Form 10-SB (File No. 0-26680) filed on March 13, 1996

10.1.5   Amendment No. 3 to Loan Agreement dated July 5, 1994

         Incorporated by reference to Exhibit 10.1.5 to the Company's
         Form 10-SB (File No. 0-26680) filed on March 13, 1996

10.1.6   Amendment No. 4 to Loan Agreement dated March 31, 1995

         Incorporated by reference to Exhibit 10.1.6 to the Company's
         Form 10-SB (File No. 0-26680) filed on March 13, 1996

10.1.7   Amendment No. 5 to Loan Agreement  dated July 13, 1995

         Incorporated  by reference to Exhibit 10.1.7 to the
         Company's Form 10-KSB for the fiscal year ended
         March 31, 1996

<PAGE> 52

10.1.8   Amendment No. 6 to Loan Agreement  dated May 13, 1996

         Incorporated by reference to Exhibit 10.1.8 to the Company's
         Form 10-QSB for the three months ended June 30, 1996

10.1.9   Amendment No. 7 to Loan Agreement dated July 5, 1997

         Incorporated by reference to Exhibit 10.1.9 to the Company's
         Form 10-QSB for the three months ended September 30, 1997

10.1.10  Amendment No. 8 to Loan Agreement dated September 18, 1998

         Incorporated by reference to Exhibit 10.2.0 to the Company's
         Form 10-QSB for the three months ended September 30, 1998

10.1.11  Amendment No. 9 to Loan Agreement dated November 25, 1998

         Incorporated by reference to Exhibit 10.2.1 to the Company's
         Form 10-QSB for the three months ended December 31, 1998

10.1.12  Amendment No. 10 to Loan Agreement dated November 24, 1999

         Incorporated by reference to Exhibit 10.2.2 to the Company's
         Form 10-QSB for the three months ended December 31, 1999

10.1.13  Amendment No. 11 to Loan Agreement dated August 1, 2000

         Incorporated by reference to Exhibit 10.1.13 to the Company's
         Form 10-KSB for the year ended  March 31, 2001

10.1.14  Amendment No. 12 to Loan Agreement dated March 16, 2001

         Incorporated by reference to Exhibit 10.1.14 to the Company's
         Form 10-KSB for the year ended  March 31, 2001

10.3.1   Employee Stock Option Plan

         Incorporated by reference to the Company's 1999 Annual Proxy
         Statement dated June 29, 1999

10.3.2   Non-Employee Stock Option Plan

         Incorporated by reference to the Company's 1999 Annual Proxy
         Statement dated June 29, 1999

10.4.1   Employment Contract, dated November 22, 1999, between
         Nicholas Financial,  Inc. and Ralph Finkenbrink, Senior
         Vice President of Finance.

         Incorporated by reference to Exhibit 10.2.1 to the Company's
         Form 10-QSB for the three months ended December 31, 1999

<PAGE> 53

10.4.2   Employment Contract, dated March 16, 2001, between Nicholas
         Financial, Inc. and Peter L. Vosotas  President & Chief
         Executive Officer.

         Incorporated by reference  to the Company's 2001 Annual
         Proxy Statement dated July 2, 2001

21       Subsidiaries of Nicholas Financial, Inc.

         Incorporated by reference to the Company's Form 10-SB
         (File No. 0-26680) filed on March 13, 1996

24       Powers of Attorney (included on signature page hereto)

99.1     Written Statement of the Chief Executive Officer Pursuant to
         18 U.S.C.  1350

99.2     Written Statement of the Chief Financial Officer Pursuant to
         18 U.S.C.  1350


         (b) Reports on Form 8-K

          The  Company  did not file any current reports on  Form  8-K
          during the fourth quarter of the fiscal year ended March 31,
          2003.

<PAGE> 54

Item 14. Controls and Procedures

      Within the 90-day period prior to the filing of this report,  an
evaluation  was  carried  out  under  the  supervision  and  with  the
participation  of  the Company's management, including  the  Company's
Chief   Executive  Officer  and  Chief  Financial  Officer,   of   the
effectiveness of the design and operation of the Company's  disclosure
controls  and  procedures  (as defined in  Rule  13a-14(c)  under  the
Securities  Exchange  Act of 1934).  Based upon  the  evaluation,  the
Chief Executive Officer and Chief Financial Officer concluded that the
design and operation of these disclosure controls and procedures  were
effective.  No significant changes were made in the Company's internal
controls  or  in other factors that could significantly  affect  these
controls subsequent to the date of their evaluation.

Item 15. Principal Accountant Fees and Services


<PAGE> 55

     The  information  set  forth under the  caption  "Appointment  of
Auditors" in the Proxy Statement is incorporated herein by reference.
                              SIGNATURES

     In accordance with Section 13 or 15(d) of the Securities Exchange
Act  of  1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned thereunto duly authorized.

                                   NICHOLAS FINANCIAL, INC.
Dated: June 30, 2003               By:  /s/ Peter L. Vosotas
                                   ------------------------------
                                   Peter L. Vosotas
                                   Chairman, Chief Executive Officer
                                   and President

      KNOW  ALL MEN BY THESE PRESENTS that each person whose signature
appears  below constitutes and appoints Peter L. Vosotas and Ralph  T.
Finkenbrink, and each of them, his or her true and lawful attorneys-in-
fact  and  agents, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any and all amendments to this report, and to file
the  same,  with  all  exhibits thereto, and any  other  documents  in
connection  therewith,  with the Securities and  Exchange  Commission,
granting  unto  said attorneys-in-fact and agents, and each  of  them,
full  power  and  authority to perform each and every  act  and  thing
requisite and necessary to be done in and about the premises, as fully
to  all intents and purposes as he or she might or could do in person,
hereby  ratifying  and  confirming all that said attorney-in-fact  and
agents  or  either of them, or their substitutes, may lawfully  do  or
cause to be done by virtue hereof.

      In  accordance with the Securities Exchange Act  of  1934,  this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

Signature                     Title                     Date

/s/ Peter L. Vosotas          Chairman of the Board,     June 30, 2003
----------------------        Chief Executive  Officer,
Peter   L.  Vosotas           President   and
                              Director


/s/Ralph T. Finkenbrink      Sr. Vice President-Finance  June  30,2003
-------------------------    (Principal Accounting
Ralph T. Finkenbrink          Officer)



/s/Ellis P. Hyman            Director                    June 30, 2003
----------------------
Ellis P. Hyman


/s/Stephen Bragin            Director                    June 30, 2003
---------------------
Stephen Bragin


/s/Alton R. Neal             Director                    June 30, 2003
---------------------
Alton R. Neal

<PAGE> 56

                             CERTIFICATION

I, Peter L. Vosotas, certify that:

     1.   I have reviewed this Annual Report on Form 10-KSB of Nicholas
       Financial, Inc.;

     2.   Based on my knowledge, this annual report does not contain any
       untrue statement of a material fact or omit to state a material fact
       necessary to make the statements made, in light of the circumstances
       under which such statements were made, not misleading with respect to
       the period covered by this annual report;

     3.    Based on my knowledge, the financial statements, and  other
       financial information included in this annual report, fairly present
       in  all  material respects the financial condition, results  of
       operations and cash flows of the registrant as of, and for, the
       periods presented in this annual report;

     4.   The registrant's other certifying officers and I are responsible
       for establishing and maintaining disclosure controls and procedures
       (as  defined in Exchange Act Rules 13a-14 and 15d-14)  for  the
       registrant and have:

          a)   designed such disclosure controls and procedures to ensure
            that material information relating to the registrant, including
            its  consolidated  subsidiaries,  is made known to us by others
            within those entities, particularly during  the period in which
            this annual report is being prepared;

          b)   evaluated the effectiveness of the registrant's disclosure
            controls and procedures as of a date within 90 days prior to the
            filing date of this annual report (the "Evaluation Date"); and

          c)   presented in this annual report our conclusions about the
            effectiveness of the disclosure controls and procedures based
            on our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed,
       based on our most recent evaluation, to the registrant's auditors and
       the audit committee of registrant's board of directors (or persons
       performing the equivalent functions):

          a)    all significant deficiencies in the design or operation of
            internal controls which could adversely affect the registrant's
            ability to record, process, summarize and report financial data
            and have identified for the  registrant's auditors any material
            weaknesses in internal controls; and

          b)   any fraud, whether or not material, that involves management
            or  other  employees  who  have  a  significant  role  in   the
            registrant's internal controls;

     6.   The registrant's other certifying officers and I have indicated
       in this annual report whether there were significant changes in
       internal controls or in other factors that could significantly affect
       internal  controls subsequent to the date or  our  most  recent
       evaluation,  including any corrective actions  with  regard  to
       significant deficiencies and material weaknesses.


          Date: June 30, 2003 /s/ Peter L Vosotas
                              ------------------------------------
                               Peter L. Vosotas
                               President & Chief Executive Officer
<PAGE> 57


                        CERTIFICATION

I, Ralph T. Finkenbrink, certify that:

     1.   I have reviewed this Annual Report on Form 10-QSB of Nicholas
       Financial, Inc.;

     2.   Based on my knowledge, this annual report does not contain any
       untrue statement of a material fact or omit to state a material fact
       necessary to make the statements made, in light of the circumstances
       under which such statements were made, not misleading with respect to
       the period covered by this annual report;

     3.    Based on my knowledge, the financial statements, and  other
       financial information included in this annual report, fairly present
       in  all  material respects the financial condition, results  of
       operations and cash flows of the registrant as of, and for, the
       periods presented in this annual report;

     4.   The registrant's other certifying officers and I are responsible
       for establishing and maintaining disclosure controls and procedures
       (as  defined in Exchange Act Rules 13a-14 and 15d-14)  for  the
       registrant and have:

           a)   designed such disclosure controls and procedures to ensure that
               material information relating to the registrant, including its
               consolidated subsidiaries, is made known to us by others within
               those entities, particularly during the period in which this
               annual report is being prepared;

           b)   evaluated the effectiveness of the registrant's disclosure
               controls and procedures as of a date within 90 days prior to
               the filing date of this annual report
               (the "Evaluation Date"); and

           c)   presented in this annual report our conclusions about the
               effectiveness of the disclosure controls and procedures based
               on our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed,
       based on our most recent evaluation, to the registrant's auditors and
       the audit committee of registrant's board of directors (or persons
       performing the equivalent functions):

           a)   all significant deficiencies in the design or operation of
               internal controls which could adversely affect the registrant's
               ability to record, process, summarize and report financial data
               and have identified  for the registrant's auditors any material
               weaknesses in internal controls; and

           b)   any fraud, whether or not material, that involves management or
               other employees who have a significant role in the registrant's
               internal controls;

     6.   The registrant's other certifying officers and I have indicated
       in this annual report whether there were significant changes in
       internal controls or in other factors that could significantly affect
       internal  controls subsequent to the date or  our  most  recent
       evaluation,  including any corrective actions  with  regard  to
       significant deficiencies and material weaknesses.


        Date: June 30, 2003    /s/Ralph T Finkenbrink
                               ---------------------------
                               Ralph T. Finkenbrink
                               Senior Vice President

<PAGE> 58

Exhibit 99.1
           Written Statement of the Chief Executive Officer
                      Pursuant to 18 U.S.C.  1350

      Solely  for the purposes of complying with 18 U.S.C.   1350,  I,
the  undersigned  Chief Executive Officer of Nicholas Financial,  Inc.
(the  "Company"),  hereby certify, based on  my  knowledge,  that  the
Annual  Report on Form 10-KSB of the Company for the year ended  March
31,  2003  (the  "Report")  fully complies with  the  requirements  of
Section  13(a)  of  the  Securities  Exchange  Act  of  1934  and  the
information  contained in the Report fairly presents, in all  material
respects,  the  financial condition and results of operations  of  the
Company.



/s/Peter L Vosotas
-----------------------
Peter L. Vosotas
Chief Executive Officer
June 30, 2003

<PAGE> 59

Exhibit 99.2
           Written Statement of the Chief Financial Officer
                      Pursuant to 18 U.S.C.  1350

      Solely  for the purposes of complying with 19 U.S.C.   1350,  I,
the  undersigned  Chief Financial Officer of Nicholas Financial,  Inc.
(the  "Company"),  hereby certify, based on  my  knowledge,  that  the
Annual  Report on Form 10-KSB of the Company for the year ended  March
31,  2003  (the  "Report")  fully complies with  the  requirements  of
Section  13(a)  of  the  Securities  Exchange  Act  of  1934  and  the
information  contained in the Report fairly presents, in all  material
respects,  the  financial condition and results of operations  of  the
Company.



/s/Ralph T Finkenbrink
-----------------------------
Ralph T. Finkenbrink
Chief Financial Officer
June 30, 2003